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Disclaimer:
This web page is designed to aid farmers with their marketing and risk
management decisions. The risk of loss in trading futures, options,
forward contracts, and hedge-to-arrive can be substantial and no warranty
is given or implied by the author or any other party. Each farmer must
consider whether such marketing strategies are appropriate for his or her
situation. This web page does not represent the views of Kansas State
University. |
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Estimated revenue insurance Harvest Price for Wheat2,
for States with Sales Closing 9/30 |
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Daily |
Daily |
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Daily |
Daily |
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Closing |
Closing |
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Closing |
Closing |
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Price |
Price |
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Price |
Price |
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KCBOT |
CBOT |
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KCBOT |
CBOT |
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July 06 |
July 06 |
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July 06 |
July 06 |
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Date |
Wheat |
Wheat |
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Date |
Wheat |
Wheat |
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07/03/06 |
5.0300 |
3.8425 |
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07/11/06 |
5.1700 |
3.9800 |
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07/05/06 |
5.1000 |
3.8650 |
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07/12/06 |
5.0900 |
3.9000 |
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07/06/06 |
5.0600 |
3.9000 |
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07/13/06 |
4.8500 |
3.7600 |
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07/07/06 |
4.9900 |
3.8150 |
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07/14/06 |
4.8700 |
3.6600 |
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07/10/06 |
5.0100 |
3.8250 |
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Avg Harvest |
KC Wheat |
Chicago Wheat |
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Price |
$5.019 |
$3.839 |
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Plant Price |
$3.52 |
$3.50 |
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Price Change |
$1.50 |
$0.34 |
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% change |
42.59% |
9.69% |
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Increase in Trigger Yield1, 2, 3 |
0.0% |
0.0% |
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1 |
In years when prices fall, it requires a smaller yield loss to trigger
revenue insurance claims but in years with higher prices it will require
an insurable yield loss to trigger a claim IF one purchased the Harvest
Price Option (HPO), otherwise it will require a yield loss greater than
the insurable yield to trigger payments. The RA without the HPO
coverage for an example wheat grower with a 50 bushel APH times 70%
coverage times planting price of $3.52 equals $123.20 of coverage.
Because of higher prices the RA-HPO coverage for an example wheat
grower and based on today's higher harvest price this same wheat
grower's coverage will increase to 50 bushel APH times 70% coverage
times current market price of $5.02 equals $175.67 |
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2 |
An Example RA-HPO Kansas Wheat Claim. A Kansas Wheat grower with a 50
bushels APH times 70% coverage times higher of harvest price of $5.02 or
plant price of $3.52 would have a revenue guarantee of $175.67. If this
grower produced 15 bushels, then based on today's price of $5.02 the
revenue to count would be $75.30 and the indemnity payment would be the
difference between the revenue to count and the revenue guarantee for
gross indemnity payment of $100.37 (before premium deduction). |
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3 |
An Example RA without HPO Kansas Wheat Claim. A Kansas wheat grower
with a 50 bushels APH times 70% coverage times plant price of $3.52
would have a revenue guarantee of $123.20. If this grower produced 15
bushels, then based on today's price of $5.02 the revenue to count would
be $75.30 and the indemnity payment would be the difference between the
revenue to count and the revenue guarantee for gross indemnity payment
of $47.90 (before premium deduction). |
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