Taking Action

by Joe | Published May 27, 2020

Noah could just have predicted rain and a big flood, but he built an ark!  This was action well worth his effort.  If all he had done was to predict a huge rain and a monstrous flood, he would have been in big trouble!

When marketing grain, the first step is to plan. Acres, bushels per acre, the amount of money per acre to break even, and the required amount of profit needed per acre are all very important items.  Put all those together and it is not too hard to plan early in the growing season, before the growing season,  or even 12-18 months prior to the anticipated harvest.  In carry markets, the best prices can come very early for a given marketing year.

Making the decisions and planning the actions are difficult, but the end result can be rewarding.  With the recent slump in the grain markets, some producers are already adjusting the price levels where they would market grain.  The time of the marketing year when there is a great deal of uncertainty in the markets because of the growing season is down to a little more than two months.  By the time the August crop report is released around August 10, users think they know how big the corn crop will be.  And don’t forget that we will probably plant around 95 million acres of corn in the US this year.  With ethanol struggling to use enough corn, the prediction is for a big 2019/2020 carryout.  It is risky to wait until harvest 2020 to start marketing corn and soybeans.

I would suggest making new crop corn offers in the $3.20 cash area and new crop soybean offers in the $8.20 cash area.  These are not levels that are very profitable with normal crops, but it may be a year when it is difficult to get very big price rallies.  Just don’t get too discouraged at this point and market too many bushels at these levels. Buying put options if we have a decent rally can also be part of the marketing strategy.  If all these things are planned ahead, much of the emotion generated from rapidly moving markets can be removed from the process.

No matter how difficult it is, we need to keep making decisions.  But no action is also a decision.  Take control of your destiny!

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