As row-crop producers continue harvesting their crops this fall, there are several sales strategies they can take, says Matt Bennett, Bennett Consulting. He spoke Sept. 16 with “Market Rally Radio” host Chip Flory.
On the soybean side of the balance sheet, prices above $10 should trigger sales for many farmers, Bennett says. On the corn side, “storage” appears to be the operative word.
Here’s how sales of both crops break down in his mind.
Corn: Act Like An Elevator
Don’t pay too much commercial storage, Bennett cautions. Instead, assume a mindset that mirrors that of an elevator.
“I want to fill my bins with corn,” he says. “The market’s got carry in it. It’s kind of telling me, you know what, there’s probably a good reason to throw this corn in storage. I want to look for some basis plays later on, and whenever I’m ready to sell the corn, I’m going to sell the carry in the market like the elevator does. Then I’m going to reap the benefit of an improved basis whenever I get a basis pop and the marketing year goes on.”
Soybeans: Don’t Dally When Opportunities Arise
Bennett knows many producers sold soybeans on the way up into the market and then got scared because they’d sold too much even as prices continued to climb.
“Now they’re looking at some of those $10 and $10.50 and $10.75 sales and saying, ‘Hey, those don’t look too bad,’ he says. “I think when you get anything $10 or above, I’m just going to haul them and go ahead and take that sale. I don’t need to protect the upside. I don’t know what that even means whenever you’re grossing $700 an acre. That doesn’t make sense to me.”
A limited-risk strategy is another way farmers selling soybeans across the scale can protect some of their bushels.
“Maybe you buy a bull-call spread for 20 cents just in case we get [an event like in] 2014,” Bennett says. “That was the biggest soybean and corn crops we’d raised, and yet we rallied over $1 on soybeans and about 70 cents on corn … . I’m not saying that’s going to happen this year, but why not throw a little bit out there just to see what happens?”