This strategy is more risky since a price decline after establishing the LDP would result in a price below the loan rate. The lower prices are at harvest, the less risk associated with this strategy. Finally, if storage space is limited, producers may establish the LDP at harvest and price the crop for immediate delivery. This results in a price near the loan rate, if the PCP is tracking the cash price. Based on current basis and spread relationships in central Illinois, this strategy is more favorable for soybeans than corn.
Current spreads suggest using storage for corn.
Reownership of soybeans with futures or options could be considered if prices are extremely low.