Marketing our crops

[48]

My approach to marketing is pretty simple. First, have your own bins. Second, know your cost of production. Anytime you can lock in a good profit, do it. Never FC/HTA more than half of your expected production before you have it in the bin. Always use the Jul contract of the next year and do scale up sales in Apr-May-Jun using the Jul contract to pick up basis and carry...usually with a HTA.

There are exceptions to this...like 2010 when USDA finally told the truth on the June 30 Stocks and Acres Report, and we have been in a bull market ever since.

We are obviously in a tight corn supply situation, and there are going to be good prices well into next year.

Not so much in SB even tho we have less production this year, there is a huge crop in S Am.

The market has already shown that $7 is about tops for corn and 14 for SB. SB have been in a Horizontal Trading Range CHANNEL for a long time from 13-14. This means they could break up out the channel to 15 or break down out of the channel to 12. With China cooling their economy off, I would guess 12 is more likely.

This week you could have HTA for 7.47 on the board using CN2.

I speculate...so then I would defend that sale by both going long and short as appropriate.

I highly recommend that you have DTN, CIS, CattleFax, ProFarmer, and Informa. I highly recommend that you study Ed Usset's book: Grain Marketing Is Simple, It's Just not easy from U of MN. I would also suggest that you study Technical Analysis and Technical Analysis Study Guide by Martin Pring.

BTW, Ed's 11th Commandment is: Thou shalt not go into July with unpriced grain. 75% of the time that is good advice, but it would have been wrong in 2010, so you have to think for yourself.

Jeremey Frost of CHS has an excellent website to help farmers market also. He posts on agweb, and I hope we can get him over here. He's a big commercial, but he really tries to help farmers. Go to agweb. You don't have to log in. Find any of Jeremey's posts under Marketing Old Crop and New Crop. The URL to his website is on most of his posts.

Jerry Gulke is the best commodity analyst out there, but his service is pricey. Make sure you listen to his weekly radio comments on the home page of agweb on Fri afternoon. Then, on Sun nite or Mon am his commentary on DTN. Click Town Hall. Click Jerry Gulke. Read this diligently every week. I guarantee it will help you.

[48]

BTW, I don't have significant storage, but I easily earn the storage with simple option strategies. You want your own storage so you can sell direct to the feed lots and ethanol plants and get better basis...sometimes even positive basis...and pick up the carry. This year if you had your own storage out here, the ethanol plant would have provided high amylase seed corn to you for free...E9143. This is Golden Harvest 9145 which is a high yielding corn. The basis is -15 and you price it whenever you want. These opportunities are just not available unless you have your own storage. You can pay these bins off in two years with the better price you get...even shorter with accelerated depreciation. The most important thing you can do in marketing your crops is to own your own storage. Plus, during harvest your bins are open 24/7 as opposed to coop.

In my own case I am thinking more about retiring than putting up silver cans, but you should. lol.

[48]

I edited the above post to include CattleFax. If you want to be a good corn trader, you need to pay attention to the cattle market. There's no use trying to follow hogs and poultry. They are vertically integrated. Cattle are bad enough with captive/formulated cattle, but there are still enough non-captive cattle to make it somewhat more reliable. Cattle will never be vertically integrated cuz it takes millions of acres of pasture for cow-calf. You don't throw up a hog shed. lol.

[glowplug]

I was a little surprised at the market action today. Bigger moves than I guessed would happen. But apparently TSHTF in Europe.

And Wall St. should have guys jumping from the tall buildings.

[48]

GP: You can still HTA corn for over $7 on the board.

[glowplug]

Locally I could contract over $6.60. Old crop fetches over $7.30 right now. Probably will haul in a load next week.

[48]

GP: Is 6.60 Dec or July 2012?

[glowplug]

6.60 + is Nov.

Keep an eye on oil right now. Markets taking a shit, so it will be time to fill on farm storage coming up.

[48]

GP: Nov??? W T F What can you FC/HTA for using Jul 2012...should be close to 7.

[48]

I modified previous post to include ProFarmer...for their commentary...NOT their charting. For $259/yr, it's worth it. Seems like it went up a little.

[48]

I didn't put that grumpy in there. Apparently, when you hit ? 3x in a row, you get a grumpy. lol.

[glowplug]

Today's close is $6.75 Oct/Nov. right off the combine. $7.46 cash here.

I also don't have bins so I pay a neighbor some years to store. Works out for both of us.

Corn here is looking much better. Possible rain coming Sat. Appears the typical Aug. drought will be elsewhere this year.

[48]

GP: You lose a lot of money...usually...selling right off the combine. You are prolly like me and getting too old to put up bins. But, I showed you how to safely earn the storage. What is your basis for Jul 2012? Bet, it's pretty close...if not over...$7.

[glowplug]

Yup some falls you do. Some falls I've had excellent contracts. Some years, I would have been better off doing nothing in marketing. But obviously you need a certain amount of money to pay bills at certain points of the year. I typically pre-pay for some imputs to max discounts, pay taxes, buy beer, you know the essential items.

Basis here ranges from 35 to 60 cents depending upon the month. You're correct that the opportunity is sometimes there to make storage pay.

[48]

CIS has an interesting study re USDA dropping yield below trendline in Aug. In 7 of 8 years that they have done this, the final yield was higher. Sooo...the high prices for the year may be in if USDA starts increasing yields. Who knows? They still have harvested acres too high. My gut feeling as I have said before is that 7 is about tops for corn...so it will surely go to 9. lol. And 14 is about tops for SB. I am a lot more confident with 14 on SB with the huge S Am crop.