Corn Ending Stocks 1925-1994
1.000 Bushtli
1.000 Bushels
* On Farm Storage Only
* * Includes an and off farm stocks
* * * Marketing year t handed In Seftlcmher 1
* * * • Vra/ettcd
S mtrec USDA/World Agricultural Outlook Board
U 43
11*272
«37 4
t 9
10 U J 044 |o*
*.4 1%
1939..
1940..
1941.
1942 ...
1943*.*.,
*137
U I'W
fi4 1074 1011
.919.681
.1.034,823
1,164,726
.1,418,904
.1,469,344
1,524,131
.1.786,966
2,016,463
.1.652,552
1,365.135
1,536,522
1,147,091
. .841,695
826,308
1,16H,688
1,118,393
.1,005,223
...666,739
.1,126,929
.707,878
..483,862
361,387
399,632
885,863
1,111.433
1,303,925
1,617,050
1,034,269
1981 2,174.006
1982 3,119,937
1983 723,223
1984.. 1,380,73 3
1983 4,039,322
1986*** 4,881,693
1987 . 4,239,086
1988 1,930,428
1989 1,344,437
1990 1,321,243
1991 1,100,31 1
1992 2,112,981
1993 850,000
IW4**** 1.658,000
Corn Talk, Lancaster Farming, Saturday, March 18, 1995—Page IS
(CGDIN TPMJK MlW§
Risk Management
A Valuable Tool
NASHVILLE, Term.—Com
fanners attending the National
Com Growers Association’s
(NCGA) 1995 Com Classic
got an earful of valuable risk
management information dur
ing two early-riser marketing
sessions.
Dr. Gerry Schwab, an exten
sion economist from Michigan
State University, provided
attendees with a risk manage
ment checklist. Schwab, whose
appearance was made possible
by Rain and Hail Insurance,
pointed out to farmers they
face risk from several factors,
including weather, policy, and
the markets.
With a plan and some dis-
cipline, however, Schwab says
com growers can manage these
and other elements by utilizing
the process of risk manage
ment. Specifically. Schwab
says farmers should:
•Know thyself—farmers
must understand their own
risk-bearing capacity, ability
and attitude.
•Identify potential sources
of risk.
•Estimate the chance of loss
and the extent of loss.
•Develop a list of the instru
ments or tools that can be used
to reduce each of the risk
sources.
•Do a situation analysis.
Compare the costs and returns
of alternatives.
Attendees at the early-riser session,
sponsored by the Chicago Board of Trade,
were given some smart marketing tips with
futures and options. The Board’s Jeffrey
Campbell reveiwed both profit futures and
options strategies and compared them with
cash sales. Campbell illustrated how cash
forward contracts can provide com grow
ers with complete price protection, but no
additional opportunity when prices rise.
Similarly, hedging with com futures can
yield a comparable result, he says, but
using futures positions can place changes
in basis at risk.
Various options strategies offer farmers
advantages in different market settings.
Campbell points out buying options allows
growers to protect prices with unlimited
upside potential, although basis risk
remains. Selling calls, on the other hand,
stifles price protection and profit gains, but
offers maximum opportunity in a stable
market. A fence or window strategy, where
farmers buy a put and sell a call at the same
time, provides the best potential and price
protection in a rising maricet. But again
profit opportunity is limited, Campbell
said, and a change in basis can impact the
value of the strategy.