| |
Soybean Worksheet |
| |
| * Items in blue are for your inputs |
Cost |
Expense Item per Acre |
% of Total |
|
Seed |
11% |
37.00 |
Fertilizer |
9% |
25.00 |
Chemicals |
9% |
10.00 |
Fuel |
3% |
30.00 |
Crop Insurance |
5% |
0.00 |
Marketing |
0% |
8.00 |
Interest |
3% |
3.00 |
Miscellaneous |
1% |
$145.00 |
Total Production Costs |
41% |
200.00 |
Rent or Land Charge |
45% |
60.00 |
Machinery Costs |
14% |
$405.00 |
Total Cost of Production / Acre |
100% |
|
| |
|
$122.00 |
Needed Profit for a 30% Return on Investment |
|
|
| |
|
| |
Income |
|
540.00 |
60 |
bpa x |
9.00 |
Cash Price |
|
22.00 |
Direct Government Payment |
|
562.00 |
Total Income |
|
157.00 |
Profit |
|
39% |
Return On Investment |
|
|
|
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|
Hedge Recommendation: |
|
| |
|
|
Purchase Vertical Call Spreads on 30% of forward sales or Calls on the number of bushels sold above insurance guaranteed bushels.
(What are Vertical Call Spreads) |
|
| |
|
Vertical Call Spreads |
| Mo |
Yr |
Strike |
|
|
|
| Nov |
08 |
10.00 |
Call |
0.72 |
Bought |
| Nov |
08 |
12.00 |
Call |
0.31 |
Sold |
|
|
|
|
-0.41 |
Spread |
|
|
|
|
-0.02 |
Commission |
|
|
|
|
-0.43 |
Net Cost |
|
|
|
|
-0.13 |
Cost 0f 50% Coverage |
|
|
|
|
|
|
$9.00 |
Cash Price of Forward Contracts |
-0.13 |
Cost of % 50% coverage using Vert. Call Spreads |
| |
|
$8.87 |
x bpa |
60 |
$532.00 |
Crop Value |
|
|
|
|
$22.00 |
Direct Govt Payment |
|
|
|
|
$554.00 |
Total Income |
|
|
|
|
-$405.00 |
Total Cost/Acre |
| 37% |
Return On Investment |
$149 |
Profit * |
|
* Still have upside potential on 50% of cash forward sales |
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