What do you do if you have crop forward priced and are in a total crop wreck

[cottonpicken]

Sure would be fun if everyone got out of their contracts grain or no grain

[Hopperbin]

Which is what a lot of farmers are asking. Which is why prices are where they are. Personally if I was short I would not try to get out now as every farmer is a bull at the moment.

[oneoff]

Well I'd personally look at history as recent as last fall.

Remember the very biggest operators (some of whom aren't really in the picture after their dispersal sales of assets) and the rest of farmers who did ( or didn't) fill their commitments to quality and volume of contracted durum at about $8.00ish last fall.

By the time those contracts were settled with buyouts; there were offers of about $15.00 US for supplies to meet those shortfalls.

Simple,, short analysis is that those on the hook netted about $1.50 (approx) for their fuzzy crop; and the balance of the penalties went to bidding up the spot market.

Then when that "little" problem was over; you noticed the top quality bids slid to about one half of their highs.

All during the time frame when there was next to zero high quality supplies for months; and basically not an additional bushel of new crop supplies produced anywhere in the whole world.

If you see today's looming problem; my advice is for every farmer not to get into that position again. Is it really worth it? Does the risk outweigh the benefits? Can't everyone see that the major benefits are all to the purchasing side of the equation?

This contracting system is price depressing; where the lowest price really is the law.

For those who vehemently disagree; then I'd love to hear the brutal explanation of how to survive the required buyout of those without Acts of God in their contracts..

[Hopperbin]

I suppose the objective should be to price if price is good but no more than comfy with in case of shortfall. That said I am sure most farmers figured in crop insurance. Agristab. Hail ins. Etc etc. otherwise if a farmer did not have all the bases covered then it's his baby. He should take care of it. Not like the government support is not there **** men grow a deck.

[Hopperbin]

Actually was supposed to say grow a dick. Will take flack and shrapnel now. Just saying we have tools. What if we did not have them.

[Oliver88]

Wait for a dip and buy a call option sounds like an option.

[mbdog]

...that's right...instead of ripping apart/discussing marketing strategies/thoughts towards charlies question....someones always got to throw in "grow a dick"...ahh AV... lol.

[biglentil]

Another option dont fill it cashout and move to mexico and send them a postcard at christmas.

[Rareearth]

Last year some companies would not let you buy out of the contract. You had a fixed price contract for this many tons, you'll have to deliver what you have and take the discounts or buy the product from a neighbour.