Posted by: usset001 | March 16, 2009

Changes to my pre-harvest marketing plan for corn

corniconOne of the most important aspects of my pre-harvest marketing plans for corn, soybeans and wheat is the selection of a minimum price objective. The minimum price objective is the price under which I am not interested in pre-harvest pricing. I think the minimum price objective should be consistent with production costs in a given area.

I wrote my 2009 pre-harvest marketing plans for corn and soybean last August. The markets view of prices and production costs were signifigantly higher last summer. The minimum prices in my corn plan were originally written as $4.25 Dec’09 (new crop) futures or $3.85 cash. I am pleased to note that with this morning’s rally in prices, we have returned to these levels for the first time since late January.

During my numerous travels and speaking engagements this winter, I showed producers my pre-harvest marketing plans and made note to the audience that I (and maybe they, too) needed to revisit these minimum prices. They feel a little high, and I am concerned about a number of decision dates looming in the April/May period. I don’t want to look back at my actions in October and regret tha fact that I made few pre-harvest sales because prices were not above my minimums. A pre-harvest marketing plan should be a plan for action. Setting minimum prices too high runs the risk of a plan for no action.

Effective today, I am lowering my minimum price objectives in corn to $3.95 Dec’09 futures or $3.55 cash, 30 cents lower than my original figures. You can find my revised plan on my website  (it should be posted by the end of the day).

For the moment, I remain comfortable with my minimum price objectives for soybeans and wheat.


Responses

  1. I think that the cost of production aspect is a very important thing to remember and also something that one has to make sure not to always look at your cost of production. As example in the case where one made perhaps a bad desicion and locked in inputs for 09 at very high levels where your break even is 50 cents or 1.00 or more higher then the rest of the market in your trade area or that much higher then the current market. It doesn’t make sense to try and compound a mistake by setting price objectives too high.

  2. Jeremey, I couldn’t agree more but it vcan be difficult medicine to swallow.


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