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Why Storing Corn Will Take Work to Make It Pay this Year

August 3, 2013
By: Sara Schafer, Farm Journal Media Business and Crops Editor
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December corn prices have been below $5 for nearly two weeks. Jerry Gulke explains how to still make money if you've miss marketing opportunities.


With as last as much of the U.S. corn crop was planted, it’s hard to believe the crop is almost now back on track. As of July 28, USDA reports 71% of the corn crop is silking, which is only 4 percentage points behind the five-year average. And, 8% of the crop is in the dough stage.

In terms of crop condition, 17% of the crop received an excellent rating, 46% good and 26% fair. That leaves just 11% at a poor or very poor rating.

Jerry Gulke, president of the Gulke Group, is predicting a large overall crop, with the only potential hiccup being a frost.

The current rosy outlook for the corn crop has sent the market on a pretty steady plunge. While Gulke has been predicting $4 corn since January, even he is surprised it happened so quickly.

"But, it all stems back to the fact we’ve curbed U.S. and global demand so much," he says. "Now we have the rest of the world growing corn and taking our market away from us."

Hear Gulke's full audio analysis:


Make On-Farm Storage a Post-Harvest, Profit-Enhancing Tool

Gulke says there is still hope for this marketing year.

"Farmers are a lot different than speculators," he says. "They have to be correct, right away." Farmers have the advantage of owning the product.

"If someone missed the selling opportunities in previous months for 2013 new crop corn, there may still be an opportunity to garner a profit or a higher selling price by storing the corn on-farm at harvest and actually make money storing it this year by earning the market carry."

Gulke says you can still work the basis and act like a mini elevator. "Elevators make their money on storing and drying, but mostly on capturing the carry."

But, to "capture the carry," he says, it requires management, due diligence and not just sit and wait.

"You have to get accumulated to using futures," he says. "You hedge it off in a big production year. Then you have the opportunity, if the price crashes, to buy your grain back."


Gulke says instead of focusing on how to hit your sales out of the park, per say, you should focus on selling your grain for a slightly better price.

"I liken it to a baseball player; all baseball players look pretty good or they wouldn’t be in the major leagues," he says. "We are all pretty good, as farmers, or we still wouldn’t be around after the 1980s. You just have to make a little more money than your competition."

He says the baseball player who gets paid $5 million versus one who gets paid $1 million is a .300 hitter as opposed to a .200 hitter. The .300 hitter only has to hit the ball one more time when at bat.

"Just be better than your competition by 10% and you won’t have a problem," Gulke says. "That’s the nice thing about being in farming – you can control your destiny."

 

Have a question for Jerry? Contact him at 815-721-4705 or jerry@gulkegroup.com.

 

For More Information
See current market prices in AgWeb's Market Center
 


 

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COMMENTS (3 Comments)

tired
Well you started out to tell us how it would take work to make money by holding grain but didn't quite get there.
So here's my question--There is a cost to storing grain--roughly $0.05/bu per month. Is grain (corn) going to increase in price at that rate between harvest and say March 2014?
11:51 AM Aug 19th
 
tired
Well you started out to tell us how it would take work to make money by holding grain but didn't quite get there.
So here's my question--There is a cost to storing grain--roughly $0.05/bu per month. Is grain (corn) going to increase in price at that rate between harvest and say March 2014?
11:50 AM Aug 19th
 
Jason - Richard, SK
I agree with Jerry. Good luck is getting a timely rain when your neighbors don't. Bad luck is when you get hailed out when the neighbors don't. Marketing is entirely about timing and focus. Keep your eye on the ball, know your surroundings and don't be afraid of change.
11:27 AM Aug 3rd
 



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