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History does not guarantee future performance

History does not guarantee future performance. Pre-harvest pricing results. Corn (C. Iowa) Soybeans Hedged Puts Hedged Syn. Put 1998 + $0.49 $0.27 +$0.69 $0.39 1999 +0.31 +0.34 -0.14 -0.23 2000 +0.44 +0.41 +0.86 +0.47

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History does not guarantee future performance

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  1. History does not guarantee future performance

  2. Pre-harvest pricing results • Corn (C. Iowa) Soybeans • HedgedPutsHedgedSyn. Put • 1998 + $0.49 $0.27 +$0.69 $0.39 • 1999 +0.31 +0.34 -0.14 -0.23 • 2000 +0.44 +0.41 +0.86 +0.47 • 2001 +0.17 +0.05 +0.10 +0.40* • Avg. +0.35 +0.27 +0.38 +0.26 • Avg. impact/yr., 1000 A., 75% sold: • Hedge +$27,800 Options +$20,060 • Synth. Put, call lifted Aug. 9

  3. Pricing Strategy Results, Corn & SoybeansR. Wisner, ISU Econ. • Pricing time: 3rd Thursday of May if Previous U.S. Crop was Normal • After Weather-induced Short U.S. Crop, Price Last Week of February. • Puts lifted in Sept.-Oct. • Synthetic Puts (hedge & buy calls) lifted in early August

  4. New-crop Corn Pricing opportunities, 2001 Dec. Futures • May 17: Dec. Fut. $2.20 • May 17: $2.20 Put: $.153 $2.10 put: $.103 $2.30 Puts: $.216 • Nov. 8: Dec. Fut.: $2.03, $2.20 Put: $.176 $2.10 put: $.085, $2.30 put: $.273 • Gains: Hedge: +$0.17 • $2.10 put: -$0.02 • $2.20 put:+$0.02 • $2.30 put:+$0.055

  5. New-crop Soybean Pricing opportunities, 2001 Nov. Futures • May 17: $4.38 $4.40 call =$.265, Put =$0.285 • Oct. 18: Fut.$4.31 $4.40 call: $.002,put: $.120 Oct. 25: $4.28 • Hedge gain: $0.07-$0.10/bu. • Options losses: Call: -$.265, Put: -$.17 Lifting calls Aug. 9: Nov. fut. $5.05, Calls: +$0.67 Gain from calls: $0.40 • Nov. Beans, Feb. 22, 01 = $4.63

  6. Optimum Time to Place a HedgeNovember Soybeans, 1975-01Avg. Gain, $/bu. • 1st Week of April vs. 3rdWk. Of May -$0.01 • 2nd Week of April vs. 3rd Wk. Of May -$0.02 • 3rd Week of April vs. 3rd Wk. Of May -$0.00 • 4th Week of April vs. 3rd Wk. Of May -$0.03 • 4th Week of May vs. 3rd Wk. Of May -$0.02

  7. Optimum Time to Lift a HedgeNovember Soybeans, 1975-01Avg. Gain, $/bu. 4th Week of Sept. vs. 2nd Wk. Of Oct. -$0.06 1st Week of Oct. vs. 2nd Wk. Of Oct. -$0.08 3rd Week of Oct. vs. 2nd Wk. Of Oct. +$0.02 4th Week of Oct. vs. 2nd Wk. Of Oct. +$0.05

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