SPE Anyone Taking it?

[charliep]

A final comment is to make sure you know the nuiances of the program including the fact SPE payment is triggered - i.e. if prices go below the 10 % trigger, you are compensated to the full coverage price set in the spring when you made your purchase decision. This would vary from an option strategy where you have a choices of different strike prices. On the other hand, you also have the alternative of collecting time value on an option during the year by selling versus SPE where the premium is an expense.

[vvalk]

That's right Charlie. You get paid back to $12.67
which is higher then today's price. Also there is a
Minus $20 basis already built into the price so it
would trigger at just over $519 a tonne not $500

[vvalk]

We are only $30 away from guaranteeing $12.67
a bus. For a cost of less then 1 bus per acre
doesn't seem too bad. It's definitely not. No
brainer which makes it really tough to decide

[vvalk]

Should say $519.50 averge futures is the trigger
for the month of October.

[errolanderson]

Charlie . . . we traded December Minneapolis spring wheat $7.50 puts today for 20 cents/bu today. This the first time we have traded Minneapolis which is an illiguid market. But for price protection these puts will work bigtime (if wheat prices continue to drop) or expire worthless if wheat rebounds through the summer/fall.

another alternative for wheat price protection.

[charliep]

Errol

Deadline has passed SPE so options strategies are
now the way to go. I think owning a selection of puts
to hedge a minimum price or calls to replace crop you
have sold/a lottery ticket for potential weather based
rallies this summer. Some challenges short but I
think it is good summer in the markets. Not really
bullish but I think prices will stay profitable.