At this point in the growing season, you have a strong idea of your cost of production for new-crop corn and soybeans, says Chris Barron, an Iowa producer and a consultant with Ag View Solutions. Now, you need to determine when to sell your grain and at what price.
Farmers and market analysts often assume sales should be made when corn hits $4 or above and soybeans reach $10 or higher.
“Is that the right number for you or me? We don’t know until we plug in that per-acre cost, which is pretty accurate at this point,” Barron says in his latest “Margin Minute” video on AgWeb.com. “Then we can start to play with price and yield to determine return on investment.”
Once you’ve calculated your gross costs and cost per acre, take the following steps:
- Manage Local Basis. Some regions had strong yields in 2016, producing a solid carryover, and will have good yields again this year. Determine if there are certain delivery times when you can get suitable basis numbers locked in.
- Keep Track Of Yield. It’s easier to do this with corn, which can be measured using ear and kernel counts, and a little more difficult with soybeans.
- Monitor Harvest Overruns. If you have capacity to story 170-bu.-per-acre corn but can’t handle anything above that on-farm, determine how to set the price on excess bushels.
- Track Cash Flow. Chances are you’ll soon need to make payments for rent and other expenses. Make sure you have enough liquidity to cover expenses.
- Evaluate Crop Insurance. If you live in a place hit hard by excessive moisture or drought, assess what your indemnity payments might be. Agricultural Risk Coverage (ARC) payments might come into play, as well.
Barron has developed a free digital Margin Opportunity Calculator farmers can use to calculate when to make commodity sales. To get a copy of the free electronic tool, email him at firstname.lastname@example.org.