What’s Driving Global Commodity Prices?
Download
1 / 28

Ethanol - PowerPoint PPT Presentation


  • 151 Views
  • Uploaded on

What’s Driving Global Commodity Prices? Chris Hurt & Corinne Alexander [email protected] [email protected] Purdue University March 31, 2011. Rapid World Economic Growth. Weak Dollar. Ethanol. What Can Ethanol Plants Pay for Corn?. Corn Price ($/ bushel). Crude Oil Price ($/barrel).

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Ethanol' - bryant


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

What’s Driving Global Commodity Prices?Chris Hurt & Corinne Alexander [email protected] [email protected] UniversityMarch 31, 2011

Department of Agricultural Economics

Purdue University


Rapid World Economic Growth

Weak Dollar

Ethanol

Department of Agricultural Economics

Purdue University



What can ethanol plants pay for corn
What Can Ethanol Plants Pay for Corn?

Corn Price

($/ bushel)

Crude Oil Price ($/barrel)

Source: http://www.farmdoc.illinois.edu/marketing/mobr/mobr_11-01/mobr_11-01.html

Department of Agricultural Economics

Purdue University



Stocks situation
Stocks Situation

Department of Agricultural Economics

Purdue University


2011

Corn + 5%

Beans - 1%

Wheat + 8%


2011 What To Plant???

Department of Agricultural Economics

Purdue University


Estimated variable cost per acre average quality indiana land 161 bu corn 49 beans 70 wheat
Estimated Variable Cost Per Acre: Average Quality Indiana Land (161 bu corn, 49 beans, 70 wheat)

Department of Agricultural Economics

Purdue University



Crop insurance prices
Crop Insurance Prices

Protected Revenue calculation assumes average quality land in Indiana, and Coverage level of 85%

Department of Agricultural Economics

Purdue University






New crop pricing alternatives
New Crop Pricing Alternatives

  • Pricing strategies that tend to work well in the Pre-harvest period include:

    • Forward cash contracting

    • Selling futures to hedge

    • Buying put options

    • Selling cash on a forward contract and also buying new crop call options (this is called a synthetic put), and

    • Fence which combines buying a put and selling a call


Recommended strategies
Recommended Strategies

  • 1.

  • 2.

  • 3.

Department of Agricultural Economics

Purdue University


Now You Know

Which

Direction

To Go

In 2011/2012!


ad