Good Fruit Grower

January 2014

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Apples and the futures market If the futures market catches on, apple growers might get paid more for sort-outs. Weekly cash market prices for apple juice concentrate Since the inception of the apple juice concentrate futures market in August 2012, futures prices have tracked market prices very closely. by Richard Lehnert Cash market Futures 12.00 A Dollars per gallon 11.00 10.00 9.00 8.00 7.00 Sept 2013 June 2013 March 2013 Nov 2012 Sept 2012 June 2012 March 2012 Dec 2011 Sept 2011 June 2011 March 2011 Nov 2010 Dec 2010 6.00 SOURCE: USDA and MGEX A Growing Legacy Since 1816 NOW is the best time to order BEFORE spring planting starts pple growers might one day be able to get more money for their cull apples by making use of the Apple Juice Concentrate Futures Market that began operation a year ago last August. They can use the market right now if they want to—anybody can buy or sell futures contracts—but it would be speculative. Many farmers who grow commodities like corn or soybeans sell contracts for future delivery as a hedge should cash prices decline. In theory, apple growers could put a floor under the price of juice- grade apples. As it stands today, however, apple growers are a bit removed from the final product. As an analogy, imagine a wheat grower having to buy futures contracts for loaves of bread. Sometimes, the price of wheat and bread seem barely related, and that can be true of apples and apple juice concentrate as well. Nonetheless, the apple juice concentrate futures market could be made to work for growers, according to Kevin Barley, a futures specialist with Morgan Stanley in Orlando, Florida. Barley chaired the Juice Products Kevin Barley Association committee that spent several years developing the apple juice concentrate futures contract, which began trading on the Minnesota Grain Exchange (MGEX) in August of 2012. Barley is working now to educate key players in the market—those who buy apple juice concentrate, the processors who make it, and the packers who sort out the apples they sell to the processors as juice-grade apples. It would help growers, he said, if the packers that buy their apples would use the futures market to put a floor under the price of apples they Washington juice apple value relative to the price of apple juice concentrate (the basis) spring planting starts & trade shows The recent value of juice apples in Washington has been roughly $4 to $5 a gallon under the price of the apple juice concentrate made from them. Sometimes the basis for juice apples widens to more than $8, as it did early in 2011. This wide basis would be expected The basis is the difference between the local cash price and the price of its related futures contract. 0.00 Dollars per gallon -1.00 -2.00 -3.00 -4.00 -5.00 -6.00 -7.00 -8.00 30 JANUARY 1, 2014 GOOD FRUIT GROWER 09/05/17 07/05/17 05/05/17 03/05/17 01/05/17 11/05/16 09/05/16 07/05/16 05/05/16 03/05/16 01/05/16 11/05/15 09/05/15 07/05/15 05/05/15 Stark Bro's Nurseries & Orchards Co. 03/05/15 800-435-8733 01/05/15 best selection 11/05/14 -9.00 SOURCE: USDA

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