Spring Price Endorsement

[FarmRanger]

Anybody here in Alberta going for the spring price endorsement this year? Looking at the revenue floor price, a year ago $7.17 for canola wouldn’t have sounded too bad, but this year….
Barley at 2.57 compared to current values…hmm.
Durum at 4.82, might work.
Hard spring wheat 4.22 ???

Any thoughts?

[Steve_Winkler]

Given the relative upswing in most of the commodity prices, I was hoping the SPE's might be more attractive. AFSC crop insurance did some things right last year with production short-fall top ups and $$ coverage per acre increases to co-incide with the market value increases, but they have failed in their SPE levels for this year. They are all too low IMO.

$2.57/bu. for barley, when you can lock in feed off the combine for well over $3/bu.??

Fixed Price Contracts for HRS aren't stellar right now but are still around $4.60/bu. net.

Granted I've sold canola for less than $7.17, but it was only a few weeks ago that you could price over $8 bu/ for new crop.

I like the idea of the SPE but they need to keep pace a little better.

Cheers,


Steve

[charliep]

Are you talking about the revenue insurance values or the Spring Price Endorsement. The revenue insurance is meant to be like the US farm program (with the issues tom4cwb will bring up). The prices are reviewed every 2 to 3 years with last year the change year. Other change is year is 50 % payment of the amount below versus 70 % a year ago. Have to purchase SPE to qualify.

Spring price endorsement is the one that uses the current crop insurance prices and pays out if declines are more that 10 % from this level (a trigger so get the full amount up to the current crop insurance prices if triggered).

Durum is worthy of consideration for RI value. Other wheats are borderline/can be considered if no other pricing action is planned before harvest. Given where both SPE and RI are cheap relative to the current market, both barley and canola are tough to recommend. Would only consider SPE if your plan is to wait till fall before pricing. Haven't looked at the other tools like options but they are likely to provide better coverage for less money (keeping in mind WCE volumes are low/trying to buy options is like fishing in a lake with small fish populations - much patience is needed).

Had a bit of a sobbering discussion today with Informa Economics (a consult AF uses). Lots of weather hype in these markets but with current US acres and good weather, there is potential to more than supply the market in the coming year on corn. The highlight on soybeans was South America - both Brazil and Argentina will respond to $7 to $8/bu beans. All dependent on weather this summer but just a respect for a market that will go higher with problems but will also drop with good weather.

[FarmRanger]

Thanks Charlie and Steve.
Charlie, I guess it doesn’t matter whether its SPE or the Revenue part, they come together as a package. I’m looking at the likelihood of either one paying anything this year. As Steve pointed out, there are other ways of locking in a higher price for the physical commodity.
I was fishing for what others were thinking about putting the silver dollar into the ‘ol SPE slot machine.

[Ron]

I didnt bother with the SPE on anything this year (have till april 30 to change my mind though) as the payout levela are so low vs the available fall contracts. Havent got serious about pricing new crop at these levels either.

[lohner]

Keep in mind the Alberta govt. is paying less of the premium this year.
I would like to be aggresively priced quite early this year.