Current Marketing Thoughts
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
$2.80 Corn! I am NOT in that Camp.
Jun 03, 2014
There is talk now floating around the trade, that if you were to extrapolate out this year’s current rating of 76% "Good-to-Excellent," it would equate to a 169.5 bushel per acre national yield or in other words about 14.2 billion bushels in total corn production. As you can imagine this has many in the marketplace throwing out more bearish price forecasts.
I'm not going to throw anyone under the bus, but I heard a couple of notable sources yesterday quoting in their reports that corn could easily print a $3 handle and perhaps even worse...maybe even trade down to sub-$3.00 levels ($2.80 perhaps).
I'm obviously NOT in this camp, but certainly believe we could continue to drift lower if nothing in the way of a weather hiccup arises. That certainly seems like a tall task to ask of "Mother Nature," especially when you consider her volatile mood swings the past few years, obviously time will tell.
From a producers perspective I am going to continue to hold at around 50% priced. I am thinking "end-users" should be looking more seriously at ways to lock in needs for the entire growing season on the breaks. As price moves lower and lower the risk-to-reward clearly begins to shift itself to the upside compared to the down.
End-users can look at techniques like simply buying out-of-the-money calls to protect the upside risk or more experienced hedgers can look at strategies that involve selling put premium and using the revenue to buy upside call protection.
Moral of the story, if the nearby weather forecast stay optimistic and prices continue to drop, end-users should be thinking about making more longer-term strategic moves.
To find out what we are doing from a producer’s perspective Click here,
Want to know what I think "end-users" should be looking more seriously at and
what simple techniques they can use at this point? Click here.