Over the past few weeks we have discussed hypothetical situations. Lets now show some real numbers. With corn done, or close to done, what do our hedges look like? Below you will see a breakdown of our clients hedge percentages:
1) Cash Forward and HTA: 47%
2) Structured contract through local elevator: 24%
3) Unpriced with derivative coverage (futures and options): 29%
Our current risk profile (across all clients) based on options positions established over the last couple of months suggest that we are 93% covered to prices falling 50 cents. Yet only 46% covered to prices rising 50 cents.
How can I be long 54% of my corn, but yet am hedged to 93% if prices fall? This is the dynamics of the strategic use of options in managing your revenue.
Give us a call to receive a one on one consultation to see how our process may be beneficial to you.