Marketing 101
The corn farmer has two very important jobs. Job number one is to raise corn for $3.00/bu, all expenses included. Job number two is to sell this corn for $4.00/bushel. When these two come together, everybody is happy.
Cash corn price at Geary Grain on September 27, 2019 is $3.43/bushel. June 2019 saw new crop 2019 forward contract prices as high as $4.25/bu. The difference between selling for $4.00/bu as compared to the cash corn price can be difference between a successful year and a rough year.
Once again, the cash price at Geary Grain is $3.43/bushel today. The new crop 2020 corn big is $3.63/bu. Would the average farmer sell his 2020 production for $4.00/bushel? The answer is no, unless the plan has been laid out well in advance. The chances to sell at profitable prices greatly increases when the plan is thought out and set in place prior to a rally in the market.
2020 Corn Marketing Plan
Determine your 2020 corn acres. Find out what your APHs are on those acres. Multiply your 2020 acres times your APHs. Multiply that number by 70%. This is the number of bushels that many producers can successfully market prior to 2020 harvest. Offer 1/3 of these bushels at $3.80/bu, offer 1/3 of these bushels at $4.00/bushel, and offer the remaining 1/3 of these bushels at $4.20/bushel. If there is a shortfall in production, having contracts for no more than 70% of APH production would normally leave only small numbers of bushels to have to cash settle on any remaining open contracts. If the cash price is higher than $4.20/bu, and there are remaining bushels, the producer is usually happy about this! Remember which side we are on, we would like prices to go higher!
Raising corn for $3.00/bu? That can be hard too!