Posted by: usset001 | November 18, 2009

2009 post-harvest marketing plan for corn

The last of my 2009 post-harvest marketing plans can now be found on the Center for Farm Financial Management website (click here). “To store or not to store” is the ultimate question at harvest, along with “to sell the carry or not to sell the carry.” For me, the choices in corn is straightforward. The carrying charges from the nearby December futures contract to the deferred March, May and July contracts are very large – the market is sending a very strong signal to store grain and sell the carry. That’s exactly what I did.

Selling the carry with a hedge-to-arrive or a futures contract has several advantages including (1) a solid hedge against lower prices in the months ahead, (2) the opportunity to earn a return to storage equal to the size of the carry and a stronger basis next year and, (3) the ability to defer income to next year.

The downside to selling the carry is in the upside or, specifically, the lack of upside price potential (and variable on-farm storage costs). I’m cool with at – my 2010 pre-harvest marketing plan is in place and I am locked and loaded for higher price opportunities in the months ahead. One of the reasons I am so comfortable with this choice was my active pricing of the 2009 crop before harvest. If the basis strengthens  as much as hoped by spring (35 cents under?), I could end up with an average cash price of $4.60 per bushel on the 2009 crop.

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