Posted by: usset001 | May 21, 2012

Pre-harvest marketing plans and pricing of 2012 corn, soybeans and spring wheat

In grain marketing plans, price objectives are important. However, decision dates are even more important because they turn marketing plans into real plans for action.

In my pre-harvest marketing plans, pricing actions are driven by two things: price objectives and decision dates. Price objectives speak for themselves, and it’s easy and fun to dream up lofty numbers for grain sales. For example, in my pre-harvest marketing plan for corn in 2012, my last (and highest) price objective calls for pricing corn with December futures at $6.15/bu. Nice thought, but the closest we’ve come this year was $5.90/bu., early in January. The challenge with price objectives is that we don’t always reach those lofty goals.

That’s where decision dates come in. Decision dates are dates when I will make a pre-harvest sale, regardless of whether I reached my price objective, as long as the price on that date is above my minimum pricing objective (and my minimum price objective is a figure consistent with my break-even cost of production).

I like to cluster decision dates in the March – June time period. While I try hard to avoid price predictions, the March – June period has more often than not proved to be good time to take action on grain pricing. My two most recent decision dates in 2012 were May 4 and May 18, so I’ve been taking some action in the past two weeks.

In the pre-harvest pricing of corn, I am currently about 60% sold at an average price of $5.82 in the Dec’12 futures contract (about $5.40 cash). The average is respectable, thanks to some very early sales made last July.

I am also about 60% sold in soybeans (see soybean plan here) and HRS wheat (see HRS plan here) at average futures prices of $12.68/bu. (Nov’12) and $8.82 (MGEX Sep’12), respectively. Like corn, I’m pleased with the early prices on spring wheat. Soybeans are frustrating – sub-$13 soybeans looks incredibly mediocre given the opportunities over the past 12 months.

To reach my objective of 75% priced before harvest, I have one more decision date approaching on June 4. Stay tuned.


Responses

  1. I appreciate the kudos.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: