Posted by: usset001 | April 17, 2012

Grain Marketing Plans update

I write and execute pre- and post harvest grain marketing plans for my mythical farms in Minnesota. It’s been a few months since I last posted on actions – there simply has not been much to talk about or do for some time. But spring is here and I expect to be active over the next two months. It’s a good time for an update as we enter into an active decision time (a few minor actions taken since the first of the year may not be updated on the marketing plans).

Post harvest 2011 corn:  Last fall I placed a large portion of the corn crop in storage and sold the carry with the sale of May corn futures. I was a basis bull then and I remain one today. At harvest, the corn basis was 61 cents under the May contract. I sold the carry with the expectation of lifting the hedge when the basis reached 20 cents under the May. The basis is currently 21 cents under the May and it would not surprise me to see the corn basis go “over” the July in May or June.

Post harvest 2011 soybeans: The price of soybeans has been nothing but up, up, and up since the first of the year. That gave me the chance to sell a modest number of unpriced beans held in storage. I also sold the carry on 15,000 bushels held in storage but my hopes for 45 cents under the May by the end of this month are fading – basis is currently about 55 cents under.

Post harvest 2011 wheat: This one was put to bed a long time ago as I have no more wheat left to price from 2011.

Pre-harvest 2012 corn: Thank goodness for an early start. Initial sales were made last July with Dec’12 corn at $6.14/bu. I added one more small sale on January 3 with Dec’12 futures at $5.90/bu. Corn prices continue to fade lower, with new crop futures near the $5.25 mark – not good, but still above my minimum price objective of $5.10/bu. A decision date looms on May 4.

Pre-harvest 2012 soybeans: I zig and soybeans zag. I missed early sales at $14/bu. late last summer by a whopping ½ cent/bu. I finally put some sales on the books in early January with Nov’12 futures trading close to $12.20/bu. Today we’re back to the $13.50 mark. I have three sales left in the plan, all slated for May and June decision dates (despite hitting my price objectives, I intend to ride this out and rely on decision dates).

Pre-harvest 2012 spring wheat: Early sales above the $9 mark look very good today. I added a small sale in early March with the Sep’12 contract trading back over the $8 mark, where it remains today. My plan calls for one more sale at $8.40/bu. or a decision date on June 4.


Responses

  1. my name israel james jr im interested in futures and learning the business of this trade . Do you have any advice for me sir . Thank you.

    j
    j


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