Posted by: usset001 | March 18, 2010

Marketing Plan(s) Update for Corn

A long winter of travel and talk has finally come to an end. It’s time to get back to feeding this blog. I want to start with corn, and an update on my 2009 post-harvest and 2010 pre-harvest actions.

Corn 2009 Post-harvest: I wrote my post-harvest marketing plan in the first week of November and surprised no one with my conservative “sell the carry” approach. In early November, the Jul’10 corn contract was trading near the $4 mark and the cash price was $3.26, or 74 under the July contract. Since then the Jul”10 contract has traded as high as $4.40 per bushel in early January, as low as $3.70, and currently hovers just above the $3.80 mark. Basis is narrowing quite slowly and stands today at about 50 under the May’10 contract. The goal I set at harvest of 35 under the Jul’10 contract by late May now seems ambitious – I suspect I will be unwinding the transaction in early June with a basis of 45-50 cents under the July.

Corn 2010 Pre-harvest: This plan was first posted in early June of last year. At the time I made two sales, representing about 20% of my expected production, with Dec’10 futures at the $4.56 mark. I have taken no actions since. I don’t mind admitting that I was having a furious debate with myself (don’t you talk to yourself?) in mid-December. My gut was telling me to step-up and take a few more actions, even though market prices were modestly short of my next objectives – hindsight says I should have been more aggressive.

I execute my pre-harvest plans using a combination of price objectives and decision dates. With Dec’10 corn currently trading near the $4 mark, my remaining price objectives (all above $4.55) look too ambitious. It looks like this year will be one of those years when my decision dates take over. My next decision date is April 14, with four more decision dates following every two weeks. I’m going to be busy, assuming that the Dec’10 contract can get back to and stay above my $4.05 minimum price objective.

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