Questions the matrix can be used to help answer are:
What happens to my profitability if prices stay where they are but I yield 20 bushels less because of weather complications?
How is my bottom line impacted if prices rally by $.50?
If I make a cash sale at today's price and the market falls $.30 by harvest, what will that do to my profitability?
At which prices & yields can I expect to receive an insurance payment?
Key items the matrix offers:
- Ability to see when a potential payment would be received on your government insurance program and how much the payment would be
- Test a potential marketing strategy, including a futures or options contract or cash sale
- Enter an expected basis level & adjust as desired
- Adjust price & yield increments
To run a Matrix report, click Reports from the top menu and select, 'Matrix.'
Choose the desired commodity profile and alter yield increment, price increment and default basis.
Note: The matrix can only be used on grain commodity profiles at this time. Livestock is not included but may be added in the future.
Enter your government insurance program information.
Note: GrainBridge does not have the capability to add private insurance products like wind, hail, etc. at this time. It is functionality that may be added in the future.
Click the green 'Run Report' button after the information has been entered.
Acres, Yield, Target & Breakeven Values
These values are derived from the entries that have been made in the Profiles, Targets and Plan sections of GrainBridge.
Note: If a Target Profit goal has been entered in the Plan, the matrix will use that target profit goal as the benchmark value in the matrix rather than breakeven. Thus, in the case of a target profit goal being entered, the red/green indicates the above or below TARGET value that the operation would experience at the corresponding price & yield.
However, if no target profit goal is used, the Target & Breakeven values will be the same, and the matrix will display the profitability related to breakeven.
'Current Values' or 'Net Difference' Toggle Switch
- Net difference is the default selection and shows the per acre profitability compared to Target (if a target profit goal is used) or compared to Breakeven (if no target profit goal is used).
- Current Value shows the total per acre value that would be received at the corresponding price and yield. It is not compared to the target or breakeven for the commodity profile.
Futures prices are listed on the verticle (y-axis). The futures month that is being used is identified above the matrix and cannot be changed. The current futures price is listed in bold and is the middle price in the range. The price range is determined by the price increment entered.
Yield is listed on the horizontal (x-axis) with the weighted average yield for the profile selected in bold and listed in the middle of the range of yields. The yield increment entered determines the range of yields.
The green cells indicate that at the corresponding yield and futures price, the operation would achieve revenue above target or breakeven. The red cells indicate a yield and price scenario that would result in revenue below target.
Each cell in the matrix represents a different scenario for the operation. The bold cell within the matrix represents the current situation. The corresponding yield and price impact the calculation of the current value of the production.
The Calculation of Above or Below Target
To view the calculation for any of the matrix cells, hover your mouse over the individual cell.
Current value takes into account the value of sold & unsold bushels, futures position gains or losses and any potential government insurance program payments.
Cash: The cash portion is comprised of sold & unsold using the selected profile's acreage and the yield in the scenario.
The 'sold' value uses the bushels that have been committed to cash contracts in the risk management section with the weighted average price of the existing sales. If a cash sale marketing strategy is tested in the matrix setup, that sale is included in the calculation of the value of 'sold' bushels. Any cash contracts that do not have basis or futures established (i.e. Basis or HTA contracts) will use the basis or futures in the matrix scenario to determine the value of the contract.
'Unsold' represents the value of the bushels that have not yet been sold on cash contracts. The unsold bushel quantity will change based on the yield in the matrix scenario (profile acres x matrix scenario yield). The value attributed to the unsold bushels is calculated using the futures price on the y-axis for the matrix less the basis level entered in matrix setup.
Note: If a market strategy using a cash sale is being tested, that value of that contract will be included in the calculation of the value of sold cash.
Futures: Calculates the gain or loss on any open brokerage positions that have been entered in the Brokerage section of GrainBridge (futures or options). The calculation incorporates the corresponding 'what-if' price listed on the y-axis when determining the value of the open positions if the market were to move to that price.
Insurance: Depending on the insurance program information entered, an insurance payment may be expected in certain price/yield scenarios. An umbrella indicates when an insurance payment may occur and the value of that payment is listed and included in current value calculation.
In the case below, this operation, which has RP at 80% coverage, could potentially receive a payment of $32.16 per acre if yield stays at the expected bushels per acre of 177.14 and prices fall $1.00 below ($2.99) from where they are today ($3.99).
Target & Breakeven
These values come directly from the Plan section of GrainBridge. Target shows the target per acre revenue needed to meet your target profit goal. Breakeven indicates the revenue per acre that is needed to breakeven on your operation. These values remain constant in all scenarios within the matrix and are also listed above the matrix chart. If the target profit goal or expenses need to be altered, those changes must be made in the Plan.