Posted by: usset001 | July 8, 2011

Pricing 2012 corn

I started talking about the prospect of pricing 2012 crop late last winter, when Dec’12 corn futures moved above the $5 per bushel mark. I wasn’t ready to take the plunge then because I don’t like leaping in front of runaway trains (which is exactly what the corn market felt like at the time). Nevertheless, the opportunity was on my radar.

By mid-June, the corn market started to look toppy and with that in mind I pushed the publication of the 2012 plan to the top of my to-do list. Since then the market has pulled back sharply three different times, only to be followed by a sharp rebound. Each rebound in prices is a little lower than the previous one. Why today? Three strikes and you’re out. I think I’ve dawdled long enough – the prospect of delivering cash corn close to $5.75 per bushel in 2012 is a great place to start. If I’m lucky, these first sales will be my worst sales. I sold 6 contracts of Dec’12 corn futures at $6.14 per bushel. This represents roughly 30% of my expected 2012 production.

I’m still on the sidelines concerning 2012 soybeans and spring wheat. Nov’12 soybean futures are trading close to $13.20 per bushel, which is about 40 cents off life-of-contract highs. It’s a good opportunity but not great – I’m willing to drag my feet a little longer.

What was I thinking in spring wheat? Sep’12 futures prices neared the $9.80 mark in late May. Six weeks later and the market is trading at $8.15 per bushel. I’ll wait a bit longer just to be stubborn. Doesn’t stubborn often enhance the decision-making process?


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