Current Marketing Thoughts

I think you have to understand the insurance guarantees you "revenue." It does not guarantee you profits. Consider the following example:

Farmer Ted has an APH of 150 bushels per acre. He takes out the max 85% coverage. At first glance you might think Farmer Ted therefore has 127.5 bushels (150 x85%) guaranteed at the Spring Price guarantee of $5.65. If he priced his remaining estimated bushels then he should be covered. Not so fast. Consider what happens in the situation below:

Farmer Ted produces a crop equal to 180 bushels per acre. Prices fall to $4.50 and Farmer Ted files a claim to get his 127.5 bushels adjusted to the Spring Price Guarantee of $5.65. Unfortunately his claim is denied. The 127.5 bushel guarantee at $5.65 is equal to $720.37 per acre. Since Farmer Ted produced 180 bushels multiplied times the $4.20 sales price he generated $756.00 per acre. Hence "Claim Denied" and no payment received.

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Moral of the story, make sure you are talking things over with your insurance provider. I certainly don't have all of the answers, but I am very fearful many of you are thinking your insurance is going to guarantee a floor on 80-85% of your production. This is somewhat true, but I believe you have to dive a little deeper and look at the entire picture. Guaranteed "revenue" per acre is a more accurate way to look at it. Remember there are several variables and moving parts that will influence or generate a payment. Yields at or above your APH could negate any type of claim or insurance payment. Just make sure you are constantly running the numbers and understand all of the specific nuances of your policy.

There is no doubt farmers have been burning the midnight oil this past week. In fact Iowa planted 56% of their crop and as a whole corn planting here in the US is 71% complete vs. just 28% last week. This brings up a very interesting point: With close to 50% of the US crop ALL going in the ground (late) during the same 7-10 day planting window (May 10-20th), I am of the opinion, the price of poker for "pollination" just escalated dramatically. Meaning the mid-to-late-July time period will now be mission-critical for the US corn crop. Any type of extreme heat or dryness could put an abnormally LARGE portion of our crop at risk.

Lets also not forget, as our good friend Chip Flory over at Pro Farmer points out, "the corn plant reaches physiological maturity about 56 days after pollination. That means the crop could still be trying to add yield when days are getting too short to gather all the energy needed." Right now I have to believe the market is currently trading a 153-158 type yield number. With over 95 million corn acres almost certain to go in the ground this type of yield does very little to excite the longer-term bulls. However, if we were to see the extend Jun-Jul-Aug forecast show more heat and less moisture, a sub-150 yield could start to become more of a reality and the bulls might once again start to run. Lets also keep in mind I am starting to hear a few more producers talking about switching to shorter varieties (some 82-day varieties even being discussed), the question is how dramatically will the shorter varieties affect overall yields?  With these cards still in the deck, I currently feel that most producers should sit tight with between 40-60% priced or hedged.

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South American supplies will NOT be able to help overall shortages in both US corn and soybeans. I have had several subscribers ask me about Brazilian corn and soybean imports and how they will effect the US market. Here's what I have been hearing and I how I see it playing out: 

South American supplies will NOT be able to help overall shortages in both US corn and soybeans. I have had several subscribers ask me about Brazilian corn and soybean imports and how they will effect the US market. Here's what I have been hearing and I how I see it playing out: