Posted by: usset001 | June 21, 2010

2009 Post-harvest marketing of corn is finished!

In early June I unwound my storage hedges on corn – selling corn held in storage and buying back outstanding futures positions. With that move, the marketing of the 2009 corn crop is finished. My weighted average cash price for 2009 was $4.49 per bushel (you can see the plan and results here). This figure includes all the benefits gathered from pre and post-harvest pricing decisions. That number looks good compared to the current spot price of $3.10-3.20 per bushel in southern Minnesota.

I should have done even better. I’ve been asked many times why I chose Pipestone, Minnesota for my mythical farms. I chose Pipestone for two reasons, (1) I had a long price history for the area and (2) I wanted a market in Minnesota that was not known for a particularly strong basis. My results would look much better if I chose a location close to the river, where I could consistently count on 10-15 cents more in basis alone. This year was a case in point; I’ve been waiting for (expecting!) a basis of 35 cents under the July contract. Many markets in southern Minnesota have had a basis of 35 cents under the July or better in the past 6 weeks. But I chose the Pipestone market, and I get a lousy 49 cents under (%@$#!).

Next time I create a mythical farm, I’m putting it somewhere with a better basis. I think I’ll go buy myself a mythical car – make it a Lexus or Mercedes.

No worries about the 11th Commandment here (Thou shall not hold unpriced corn in storage beyond July 1).

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