N/C corn contracts, what are you guys getting

$3.82 for local elevator, I seen $4.40 (CBOT) for sept. This is my first year trying out the contract thing. Thinking of contracting 1/3 of what I expect to get now, and wait to see if it trends up or down before I contract another 1/3. I dont want to contract more than 2/3 of expected. Any advice from you experienced guys out there? Isnt there a planting report coming out some time soon that should affect the market?

Our elevator bid for october is $4.03 as of yesterdays close. Sold some old crop corn while I was planting on tuesday for $4.12. I had been hoping for more. I am a little concered about how to market a crop I havent been able to plant when it is may 14. Another problem with a wet spring.
bill

We are currently at $3.92 for october delivery at local elevator. There is about another $.12 available if delivered 20 miles away. We have some fall corn contracted at $4.21 but that was sold about 18 months ago. I have been using more & more puts on the CBOT. Using the board you can protect your bottom price yet capitalize if the price goes up. It also allows you to protect your full crop potential without worry if your crop will produce as planned. Since the puts or calls are only paper you don't have to deliver on them.

I was sure glad last year that we bought a put on our soybeans and were protected and then recieved an extra $2 at the time we sold them. sure it cost me $.36 a bushel to buy the put but the gain was significant. If the market would have went south I would have collect by selling the put and at least made my guarantee.

I'm kind of conservative when it comes to contracting. I like to know my crop is in the ground and have an idea as to potential ( I know most marketing experts recommend a quarter to one third of expected crop ahead). Wish I had the financial versatility to pursue puts and other options.
My biggest issue is the financial soundness of the elevator making the contract. We have had more than a couple go belly up since I have been farming. Elevators here in New York are bonded but I know of plenty of farmers who were short changed in spite of this. A lot of them had to wait many months for any settlement. The fact that a lot of these fellas change the subject when that topic comes up tells me they really got it stuck to. The other issue is when the elevator gets creative to cover its short comings. This means dockage of all types (NO broken kernels/seeds, NO foreign matter, little slack on test weight, color/appearance issues).
I would be interested in hearing others comment to what I said and maybe have more confidence in contracting (more so the people I'm dealing with) based on their opinion.

Could you explain what "puts and calls" are. I havent heard that term, and have no idea of how I would even go about it. Could you or some one else, define this a bit for me, sounds interesting/

Just sold 5000 bu for 4.01 delivered in Nov to local Elevator.

Cash is 3.99 pickup on the farm. So I sold some old crop corn and beans(11.04) today.

Explain what a "put" is and what does CBOT mean?

CBOT = Chicago Board of Trade (Commodities Market kind of analogous to NYSE)

Puts and Calls = Gives the purchaser the "right", but not an obligation, to sell or buy an asset (commodity/stock/security/etc.) Can be used as a "safety net" as described above. These terms are how finance gets to be a field of study. This is pretty much the extent of my knowledge on the subject, never used them for anything.

Kirk

I'm about 3 years ahead of you on forward contracting.

Sounds like you are planning well.

Puts & calls get complicated when you have small acres & only local elevators around.

Also 'hedge to arrive'.

Some of these let you seperate CBOT prices from local (called 'basis' prices, so you get to try to guess both the CBOT prices and the local basis prices. Two times as much stuff to keep track of.

To do it right, you need to park the tractors & become a marketer, keep up with the fellas in suits.

Starting out as you are is a good thing, learn for the 1st year.

These past 2 years have been just odd for selling grains, nothing is as it should be.

Be careful of getting advice from your local leevator; I learn a lot from them, but understand they are _buyers_ of grain, and even their good advice comes from a buyer's point of view, not a seller's point of view.

Three years ago the coop marketing guy said prices are so low, we should sell some crop for the next 3 years to ensure the best of the worst prices. I kinda chuckled. If I'da listened to him, I'd have some $2.58 corn locked in to this fall yet! You don't lock in historically low prices.....

Likewise last year, they stopped buying contracts from us farmers - before that we were partners, had to plan together, work together, partners you know. But, opps, prices are historically high, so we won't market your grain into the future at these prices! So much for the 'partnership'.

Remember you are learning & gaining knowledge on marketing, but it's your stuff, don't let others talk you into stupid deals.

You don't sell 3 years of grain at a historical low point, and look for other buyers when someone stops working with you.

--->Paul

To 'get' puts and calls you have to back up to the underlying futures contract. You can either buy, or sell a contract. It doesnt matter if you own corn, plant corn, or not. The contract will specify when and where you must make, or take delivery. In reality, few contracts are delivered or collected. Most people, if they sold one, will buy one to cover it and sell their production locally or if they bought one, will sell one and buy what they need locally. Regardless, you will win on one side, lose on the other but guarentee your price.

Puts and calls (both are options) are like insurance. You are buying the right to buy a futures contract at a fixed price for a fixed period of time. They are also traded on the exchanges. The great thing about them is you arent obligated to the full contract, what you pay for the option is all you are obligated for is the price of the option itself.

There are some good tutorials on NYMEX and CBOT. Also, check around locally. My commodities broker is local, just a three person operation in an office trailer beside the stockyards. They are affiliated with an independent dealership to make the actual trades on the exchanges but as far as questions, answers, and ideas they taught me a lot.

I've been using contracts for a few years now. Last two years it was a mistake. Before that you could be sure that what you contracted for in December through March was going to be higher then cash price at harvest. Last 2 years it's been the other way around.
This year the elevator is limiting the amount of crop that can be contracted. The limit is so low you cannot cover costs. Which means if harvest prices drop per normal alot of us will definitly loose money.
Remember Virginia is a corn deficient area, meaning the chicken and pig growers have to import corn for feed. So corn prices are only 10 cents under CBOT.

A put or call option can be purchased thru a licensed commodity broker. Infinitytrading.com has many tutorials as well as a good commodity menu. In simple example Today you could buy a December $4.00 put for about $.28/bu all paid upfront. These are ussually 5,000 bushell contracts. Your put will increase in value if the market falls to say $3.25. You then would sell your corn for the $3.25 at the local market. You then can sell your put option for hopefully $.75. Still grossing your $4.00 minus your cost of the option purchase. Sure it cost the 28 cents but it beat the 75 you would have lost with out protection.
On the otherside Corn went to $4.50 your put would probably expire without value. You just sell your cash crop for the $4.50 and will lose most all value of the put option. Still you netted $4.22 on your corn. The other part to consider that the weather goes against you and don't have enough crop to cover a cash contract, in a option situation there is no delivery so you are not left holding the bag to cover a short crop. In essence you can lock in a floor on 100% of your crop today and still gain from any market up turns tommorrow.
Calls are used in reverse. We use them primarily for commodities that we intend to purchase such as feed or feeder cattle.
I'm not an expert or broker so take time to research and visit with a local broker. My first time I asked my banker for a reference of a commodity broker. After meeting with him he gave me some great education materials. We only use the options are price insurance not as a speculation.

Sold new crop December 09 for $5(15,000bushels).Be careful with puts/calls and make sure you have money readily available same day.It can very profitable if you understand it and stay on top of it.