After months and months of waiting, a rally comes (finally) to the corn market. Dec’15 futures prices at $4.31½ have returned to levels not seen since last December. Last February, I had the chance to speak at Commodity Classic in Phoenix. I told hundreds of farmers gathered at 7:00 a.m. that I believed the market for Dec’15 futures – then trading at $4.15 per bushel – had a good chance of returning to December highs closer to $4.40 per bushel. What followed was not a rally, but four months of lower prices and heartbreak, as Dec’15 corn sank to $3.65. I promised myself that a rally back to $4.25 must be sold, because I hate going into harvest with nothing on the books.
December corn at $4.315/bu. will not cover all production costs, and it is below my minimum price objective. However, it is high enough to catch my attention and minimize losses (also known as Plan B – what we do when maximizing profits does not appear to be in the cards). I will take the opportunity to price 25,000 bushel of 2015 crop with the sale of five contracts of Dec’15 corn futures. This represents about 25% of my expected crop.
Yes, I have my eye on soybeans and spring wheat. Today, Nov’15 soybeans closed at $10.37/bu. and Sep’15 spring wheat at $6.37/bu. I would like to see $10.50 and $6.60, respectively, to get started with pricing these crops.
As always, I must hope that my first sales are my worst sales.