Manage the Corn Sales Frenzy Early

June 2, 2015 12:00 PM
Manage the Corn Sales Frenzy Early

As farmers sell grain from the bin ahead of harvest 2015, they should buy call options and make plans early, advises Mike North, Commodity Risk Management Group.

Power Hour Noon Logo“Right now, the estimate is 40% to 45% of last year’s crop is still in the bin on the farm,” North points out in an interview with Clinton Griffiths on the “AgDay” Agribusiness Update segment. “That is the highest number that I can remember at this time of the year. That’s big considering the size of the bushels. The reality of that is they’ve got to come to town because we’ve got another crop coming. [Farmers] don’t like storing corn in the middle of the summer because it becomes a spoilage liability. A lot of bins are going to be moving toward cleanout in the course of the next 60 days.”

To manage the oncoming glut of grain, producers must have an organizational strategy in place.

“If I’m sitting on a bunch of grain that needs to be sold right now, my advice would be to call ahead, book the grain for delivery rather than just showing up with a truck,” North says. “Then go back into the market and buy some calls because what has kept many people from pricing corn is they’ve been holding on just waiting for that rally that everybody kept talking about that never showed up.

“We don’t know what the summer’s going to bring,” he continues. “I think we all respect the fact that the markets can move. Price the corn, minimize your downside exposure by having that sale made and then step back in and accept a little bit of risk in the form of a call option just in case that rally shows up.”

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Spell Check

Walton, IN
6/9/2015 09:30 AM

  Scott, anecdotal evidence won't get you too far in life. As far as old crop corn goes, it's there trust me. As far as new crop goes, I can point you to a lot of farmers in Central Ill, and Iowa, Minn, and Neb. that will tell you the opposite of what you just stated. This is a big country and there are always problem areas. What you need to keep in mind are the world stocks in both corn and beans. The world has plenty of both and a flatlining demand. Don't let emotion , or conspiracy theories run your marketing plan.

Elkhart, IL
6/9/2015 12:52 AM

  Everyone seems to think we will have an oncoming glut of grain this fall. Talk to people in central Illinois who just received 5 inches of rain in the past 24 hours and tell me we are going to have a glut of grain this fall! Talk to people in Southern Illinois and Missouri that have weed and grass fields instead of soybean fields! As of the marketing side Mr. North you say farmers have 40 to 45 percent of 2014 crop stored on the farm! I disagree! Most farmers I know in central Illinois haul their corn to the elevator and don't use grain bins! They also sold earlier in the year because they didn't want to pay storage costs plus they didn't listen to market analyst rhetoric of higher prices this summer! Now market analysts such as Mr. North say we have all this inventory sitting in the grain bin! So Mr. North where is all this corn?


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