Jul 28, 2014
Home| Tools| Blogs| Discussions| Sign UpLogin

It Pays to Haul

January 25, 2014
 
 

Shop around to find the highest bidder

By Sara Schafer and Fran Howard

pulse

With cash corn and soybean prices much lower than a year ago, seeking out several buyers for your grain is even more critical.

Basis, the difference between the futures price and the cash price, can fluctuate based on regional supply and demand, says Brain Grete, senior market analyst for Pro Farmer.

"Basis varies greatly by area," Grete explains. "In some areas, an elevator or co-op might have a better bid, while it might be an ethanol plant or feedlot in other areas. Farmers should constantly shop around."

A Dec. 18 Farm Journal Pulse shows 31% of the 1,500 respondents transport their grain, on average, one to 10 miles to sell it and 26% travel 11 to 20 miles. Slightly less than 30% of respondents transport grain 31 miles or more.

Don’t leave money behind. Farmers can earn significant premiums for their grain by selling to multiple buyers, says Logan Burgess, a grain broker for Grain Hedge in Bozeman, Mont. That company collects and tracks 40,000 cash market bids from around the country each day and has been doing so for the past 10 years.

"Our research has shown that a corn producer’s best market will change six times during the course of a year, on average," Burgess says. "But on average, a producer will only sell to two separate locations in a year. Producers might be leaving cents on the table if they aren’t selling grain to more markets."

Each cent per bushel lost can add up to big bucks for a corn grower and possibly more for a soybean farmer. "Soybean producers need to be even more attentive to basis," Burgess says. "A soybean producer’s best market will change, on average, eight times during the year."

As corn and soybean prices slip closer to break-even costs for many producers, shopping for basis becomes even more important. "Looking at cash prices over the past five to 10 years shows that basis is becoming more volatile," Burgess says.

The "best markets" Burgess refers to could be a river terminal, elevator, oil crusher, ethanol plant or other end-user of corn or soybeans, depending on who needs the grain the most.

Of course, there are expenses associated with hauling grain to markets that are further away. Grete encourages farmers to factor in the cost of fuel, storage, wear and tear on vehicles, as well as the time spent determining the total cost. By knowing these numbers, you can adequately weigh your options. Grete also suggests tracking basis to find historical patterns and know which one of your markets is offering the strongest price. 

You can e-mail Sara Schafer at sschafer@farmjournal.com.

Track Top Five Local Cash Grain Bids

Wondering which local elevator is offering the best cash grain price? Go online to AgWeb’s Cash Grain Bids section and enter your ZIP code to find the cash bids and basis levels for the five elevators closest to you.

Want the same information on-the-go? You can download AgWeb’s Cash Grain Bids app for iPhone, iPad and Android devices. This free app allows you to see cash bids in your area. Select your crop, input your ZIP code (or activate location services) and choose one of five elevators closest to you to compare prices. You can also call your desired elevator from the app. In the iTunes and Android app stores, search for "Cash Grain Bids." www.AgWeb.com/cash_grain_bids

To see a full listing of past Farm Journal Pulse polls and to sign up to participate in the survey, visit www.FarmJournalPulse.com
 

See Comments

FEATURED IN: Farm Journal - February 2014

 
Log In or Sign Up to comment

COMMENTS

No comments have been posted



Name:

Comments:

Receive the latest news, information and commentary customized for you. Sign up to receive Top Producer's eNewsletter today!

 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions