Posted by: usset001 | November 28, 2011

2012 Pre-Harvest Marketing Plan for Corn: An Update

Several weeks ago, I asked a colleague at the Center for Farm Financial Management to update his projections for production costs in Southern Minnesota. Estimated production costs are a very important number in my approach to pre-harvest marketing. They represent my minimum pricing objective – a number, under which, I am unwilling to price grain before harvest. The update was needed because costs do change. Fertilizer prices, for example, are much higher today than when we put together a quick projection for 2012 costs last spring.

Hmm, the updated projections were surprising, and much higher than the quick projections from last spring. These higher projections have prompted me to revise my 2012 pre-harvest marketing plan for corn. The new minimum pricing objective is $4.60 cash corn, or 35 cents/bu. higher than the original figure. In terms of a new crop futures price, the minimum pricing objective is $5.10 Dec’12 futures (currently near the $5.40/bu. mark). That’s 45 cents/bu. higher than the original figure (yes, I widened my expectations for a new crop basis to 50 cents under the Dec’12 contract). In addition to raising the minimum price, all other price targets have been revised upward.

All of my marketing plans, including my revised corn plan for 2012, can be found here.


Responses

  1. What are some of the most important questions you ask farmers before doing a pre-harvest marketing plan?


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