Posted by: usset001 | May 22, 2009

Grain Marketing Plans for 2008, 2009 and 2010

Joe Usset on Gabbro Lake, BWCAW May 2007

Joe Usset on Gabbro Lake, BWCAW May 2007

Before I embark on a canoe trip with two sons into the BWCAW next week, I want it noted that I have been paying attention to marketing plans that span across three crop years. Pricing and delivery of 2008 soybean and spring wheat crops is completed. Post-harvest marketing of corn will be completed by mid-June.

Today is a decision date for another sale of 2009 soybeans, which leaves me with just one more early-June pre-harvest sale for corn, soybeans and spring wheat. Markets have cooperated nicely – I like to sell into a spring price rally. Of course, the rally may keep going which is OK too, because that brings us to 2010.

I have yet to write and post my 2010 pre-harvest marketing plans, but they are on my mind. Upon my return from intense fishing and camping, I intend to take a sharp pencil to production costs in 2010. Any producer can a get a pretty good handle on them right now, as fertilizer quotes for fall application are generally available. I suspect that I will find that 2010 pre-harvest sales of corn and soybeans will look very attractive, with Dec’10 corn futures trading near the $4.50 mark and Nov’10 soybean futures above the $9.50 mark. For whatever reason, good margins have a way of disappearing too quickly from the business of grain production.

What are your thoughts on 2010?


Responses

  1. I like making small sales now but also locking in same percentage as many input costs as possible. Meaning if I want to sell 5% of my expected production or 5% of my insurance GTD I want to try to lock in 5% of my fertilizer that I need to grow that crop. Generally many sell grain in small increments so it only makes sense to try and lock in inputs/expenses in small increments to help keep the Profit equation balanced (Gross Profit = Revenue (grain sales) minus expenses and cost of goods sold (inputs in this case)……I think there are probably better hedge methods avaible then using Dec corn for example or Nov beans…..I think one probably sells the higher inverted futures such as July 2010 and trieds to roll if/when the market goes under pressure at which time we tend to go close to a carry market or at least less of an inverse….but this adds more risk


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