We are in the last few days of the 2015 price discovery period for crop insurance.
Though this last week has provided some interesting price action, volatility remains pretty low. This is a good sign for insurance premiums being relatively low.
The average prices however, aren't guaranteeing a whole lot to the farmer much as far as breakeven and cash flow. The last few years, deducing a downward market, I made a calculated decision to exclude the harvest price option in some counties. With a solid baseline from the spring price, I was willing to take the chance of a short crop, knowing I just wouldn't make as much money. I saved a few bucks that way and bought up a level. Buying up a level paid dividends as losses were triggered quicker.
This year, I think I'll have to take the harvest price option and stay at the higher level in an attempt to mitigate potential losses. We will begin to make insurance decisions next week after the discovery period has ended and the quoting worksheets are updated.
Speaking of price action in the futures market, days like today remind me why I should place orders in the market. There was a thirty cent bump in the early soybean market, only to close up fifteen. With a strong local nearby basis of +20, we could have cashed in right around $10.50.
Of course, I didn't have an order in, nor did I pick up the phone and sell any. I am hopeful that breaking through resistance will lead us another leg higher.
There will be more opportunities to sell. But it seems this is the third time in a week we have had action like this, but we haven't been able to string two days together. One day you'd think I'll learn. It may be about forcing a mental change and adjusting to the lower markets. It just isn't that easy to get revved up about selling at these levels.
The opinions of Kyle Stackhouse are not necessarily those of Farm Futures or the Penton Farm Progress Group.