Alberta crop insurance SPE

[rook]

canola $9.53
HRS high pro $5.80

As far as crop insurance goes, these are not bad prices. Any chance October prices are lower? Personally I can't see it.

[FarmRanger]

9.53 per bushel canola is about $420/tonne. On my forms, the SPE costs $10 per tonne for this level of coverage.
As of the close of April 4, you could buy a 420 put for $3.90 per tonne. You have to add brokerage fees to that, but they would have to be greater than $6/tonne to be a worse deal than the SPE. For $8.50/tonne today, you could have bought a $460/tonne put ($10.43/bu.). Unless the market tanks between now and the end of April, I don’t think I’ll be buying the SPE for canola.

At the money November puts are pretty expensive at around $65/tonne, but they would guarantee a floor price of (627.9 – 65) X .02268 = $12.75/bushel (less interest costs, November basis and brokerage fees).

[FarmRanger]

Does anyone know if AFSC buys out of the money puts from the commodity exchange, or keep the risk themselves?

[rook]

thanks for that post, FarmRanger. I learned something from that