Focus on Managing Risk

With harvest behind us, many producers are ready to close the door on 2012.  Let’s take what we’ve learned and apply it to our 2013 marketing plan.  One thing is certain…..futures markets will be volatile and basis swings are likely to be large. Game changers to cause concern for 2013 include:

1. The global economic slowdown continues to loom over our heads
2. Tight U.S. and world carryout in all commodities linger
3. Domestic feed usage is being cut in all sectors; cattle, hogs, and poultry
4. Ethanol production should flat line due to the extention of the EPA’s ethanol mandate
5. Southern hemisphere weather has been less than ideal for optimal planting conditions (noted dryness in Southern Brazil and extreme moisture delaying planting progress in Argentina)
6. Corn break even around $5 per bushel and today’s cash price for corn range is $7.45-$7.75
7. $8.00 U.S. corn has attracted global attention and increased world production.  Worldwide production is growing and other countries are joining the U.S. in being corn exporters.
8. The biggest mover of the futures market remains the unstable weather patterns

by Lori Wyman, Grain Merchandiser

It is the unknown game changer that will catch us off guard.  So how do you, the producer, plan for that scenario.  First, recognize that you, I, or any market advisor, cannot outguess this market.  Make a choice today to develop a sound marketing plan based on locking in profit for your business, basing those decisions on a blend of the known factors you see today, and the unknown factors that may change the playing field.The trap for 2013 is in thinking $8 corn and $16 beans are the “new norm”.   We expect basis to remain strong into the spring and summer of 2013 and futures markets to stay volatile thru pollination.  Market your grain for profitability by developing a plan, implementing the plan, and making adjustments to your plan as market drivers change.  Contact Lori, Tyler, or Amanda in the York office (402-362-8404) or Maxine in the Shelby office (402-527-5511) to assist you with marketing decisions.