Marketing From Here On Out...Are You Considering These Important Dynamics???
Aug 28, 2012
Producers from here on out have to carefully examine their INDIVIDUAL sets of circumstances. With such extreme variances in this year's crop you simply can NOT afford to follow the advice of any one analyst or advisor. As I continue to preach, "cookie cutter" systems simply do NOT work any longer. The equations for each operation are too complicated. There are simply too many dynamics and variables associated with each operation, region and crop. You have to take the information that is circulating and apply it specifically to your operation.
Point being, if you have "Good Quality" corn this year with a strong test weight you may want to consider storing more bushels than normal, simply because it could be in high demand and limited supply as we move forward in the marketing year. Producers who are finding low test weights, aflatoxins and overall poor quality should be considering just the opposite.
Soybean producers who are looking at an exceptionally strong basis in their area should be thinking about selling every single bushel they can right now and re-owning the board with some type of limited risk bull strategy. Why would you want to fight such a strong "inverse?" The MAY13 soybean contract is trading almost $2.00 cheaper than the NOV12 contract, it just doesn't make sense to store the bushels into a strong basis and inverted market. On the other hand, if the bean basis is horrible in your area you may want to consider storing a few extra bushels rather than selling out simply thinking if things get as tight as everyone is anticipating, you might see a nice pop in the basis.
The bottom-line is you have to carefully examine your individual situation. Your decisions will have to be based on what type of available storage you have, what is the quality of your crop, how much cash flow are you going to need in the next 6-12 months? What is the basis like in your area?What are your alternative marketing options? What are your plans if the ethanol plant shuts down?what if the dairy across the street closes? These are all things that you need to consider as the CEO of your operation. Don't look for or rely on others to make that decision for you. Getting opinions and help in regards to market direction or timing is one thing, but only you can answer the important detailed questions and intricate dynamics that need to be addressed for optimal marketing results.
***Remember, tough times don't last, tough people do!!!
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