Posted by: usset001 | August 22, 2008

Corn: 2009 Pre-Harvest Marketing Plan

I dragged my feet long enough on publishing my pre-harvest marketing plans for 2009. But I dragged my feet for a reason; after two straight years of being a little too early and a little too cheap in pre-harvest pricing, I promised to be patient. It’s not easy to be patient when such great pricing opportunities are staring you in the face. It helped to remind myself that the current bull market is nearly two years in the making and, with ethanol demand continuing to grow, it is not like to make a hasty exit.

You can find my 2009 pre-harvest marketing plan for corn here.

Here are some of the key changes from 2008…

(1) I raised my minimum pricing objective sharply, from $2.60 cash/$3.00 December futures in 2008 to $3.85 cash/$4.25 futures for 2009. I want my minimum price to reflect local production costs, and I don’t think I need to remind any producer how much production costs have risen in the past 2 years.

(2) The increment between each pricing step is now 25 cents vs. 15 in 2008, resulting in a much higher maximum price objective ($5.75 Dec’09 futures vs. $3.90 Dec’08 futures).

(3) The start date is January 1, 2009 but I am willing to make earlier sales at a 30 cent premium to prices noted in the plan. Note that I continue to limit my early sales (pre Jan 1, 2009) to roughly 35% of my expected crop. Dec’09 corn futures closed last night at $6.45 – 70 cents higher than my maximum price objective. Why not price 100% of my 2009 corn crop? Great question and one of such importance, I want to deal with it separately in a later posting.

Now that my plan is posted, I consider it active and I took the first two steps on behalf of my mythical farm to price 20,000 bushels (~20%) of my 2009 crop. I could price another 15,000 bushels (steps 3 & 4) but patience – I have months to get it done.


Responses

  1. Great post. I will read your posts frequently. Added you to the RSS reader.

  2. Has any update been made to your pre-harvest market plan based on current production costs and grain prices as of mid December?

  3. How do you arrive at the dates in your “sell at or sell by” scenarios

  4. Ahaa, its nice discussion concerning this piece of writing
    here at this blog, I have read all that, so now me also commenting here.

  5. I tend not to write a leave a response, but I looked at a few of the comments on Corn:
    2009 Pre-Harvest Marketing Plan | Ed’s World : Grain Marketing. I actually do have some questions for you if you do not mind. Is it just me or do some of these responses appear like they are left by brain dead folks? 😛 And, if you are writing on additional places, I would like to follow you. Would you post a list of all of all your social networking sites like your twitter feed, Facebook page or linkedin profile?

  6. Very good info. Lucky me I came across your site by accident (stumbleupon).
    I have saved as a favorite for later!


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