By Andrew Frankenfield
Did you sell more 2020 grain than you would have liked at a price that is lower than where the market is today? Was the price you received at a profit? I would expect everyone would answer yes to these questions. No one can predict the commodity markets. It is best not to look back at individual grain marketing decisions you made for your 2020 crop but rather average all your grain sales per crop. If you are still holding unpriced grain, I hope you have a written marketing plan in place for determining when and/or at what price you are going to sell a certain number of bushels.
Instead, let us focus on the 2021 crop. Most likely you have already locked in and paid for many of your costs for this crop. What is the market offering you for soybeans delivered at harvest? It is probably somewhere in the $11 range. I know that is not the $14 you could have gotten last week for cash 2020 soybeans you had stored in your bin but a nice improvement over the cash soybeans delivered in early October 2020 at about $9.75.
Do not forget about corn. Cash price for 2020 corn is around $6.00 for delivery in the upcoming couple months. What is your marketing plan for your 2020 corn? How about the 2021 corn crop? You could lock in a price for this time next year in the low to mid $5.
It is typically recommended to spread out your sales of commodities to spread out your risk. No one ever went broke selling grain at profitable price. You will never capture the peak of the market with all your bushels. If you are nervous about locking in a price for a portion of your 2021 crop because the market may go higher maybe you want to think about buying call options. Keep in mind, buying calls to hedge against sales cannot be a practice you do in some years and not others. Inevitably you will miss the years they work well if you try to do it this way. If you would like to know more about options check out this Grain Price Options Basics
factsheet from Iowa State University.
Maybe you would like some guidance on writing a marketing plan? Ed Usset, Grain Marketing Economist for the Center for Farm Financial Management at the University of Minnesota has sample Grain Marketing Plans on his
website. He also has several
online Grain Marketing Educational tools where you can learn at your own pace. These games allow players to sell cash grain, forward contract of later delivery, or use futures contracts and/or options to price grain harvested. I encourage you to give them a try.