Soybean prices continue to struggle, and as such, selling soybeans above your price target can be a challenge. But, are you thinking about gross revenue per acre when you’re setting that price target? That can be the difference between needing $10 soybeans and being able to find profit at $8, says Top Producer columnist Chris Barron of Ag View Solutions.
“I think this year, one of the things we need to be looking at is our pricing on the marketing side of things,” he says. “When commodity prices are as low as they are it definitely has an emotional impact on us. From a business perspective we look at this flat cash price, but we want to make sure that we pay attention to some of the other factors that that contribute to that price, or conversely, some of the factors that may detract from that price.”
For example, what things can add to the flat price you’re being paid for grains? Barron uses basis as an example. “If you're in an area where your basis is really wide, the cash market let's say for corn is $3.25, or maybe you're in an area where you're lucky and basis is a little better, maybe your cash price is $3.50,” he explains. “What we want to do is we want to look at these other factors such as premiums and government program payments that you might be receiving some indemnity payments from, for example, the crop insurance or any of those types of things. And then the other additional one is the tariff compensation. On soybeans, as a more specific example, we're looking at 82.5 cents, start adding that to it.”
Barron puts some real numbers to it.
“Look at soybeans and let's say you've got an opportunity for $8 cash soybeans. You add in that 82.5 cents and all of a sudden, you know, that's almost another dollar to the bottom line,” he explains. “I've got a situation here that I'm looking at with a grower that that had a couple of cents premium there, and then you add in the 82.5 cents, that grower’s looking at $8.93.”
According to Barron, dialing in production costs once our yields are in and looking at gross revenue on a per acre basis is more important now than ever.
“Maybe we don't need $10 beans, maybe $8.50 works, or maybe $8 works,” he says. “It kind of depends on the farm and, and the individual costs by farm.”
Learn more by reading Barron's column in the November issue of Top Producer.