Many producers are very happy with the yields they are seeing; some yields were better than expected. Increases in yield can significantly change your marketing plan, and it is important to consider this in your overall planning. Additional yield is basically a windfall providing extra profits to your bottom line. Added yield impacts your marketing plan by reducing your estimated break even. The chart below is an example; the estimated marketing plan was set at 175 bushels per acre for corn and 50 for beans, based on cost of inputs, etc. Then we fast forward to harvest time when the final yields come in. If there are additional bushels, expenses would be dispersed evenly across all bushels, thus reducing cost per bushel. There is additional profit to be had across each and every bushel due to the additional yield. This is one of the reasons break even calculations are so important in budgeting and planning. These windfall bushels are a great thing because in this scenario it is much easier to make a profitable sale during such a difficult market.
In the above example, you will notice the increased yield greatly impacted the estimated break even by reducing the overall cost per bushel reflected in the actual break even. This is just an example of how your operation may be impacted by a high yielding year.
If you need assistance with your marketing plan or breakeven calculations, please feel free to contact a ProEdge Risk Management Consultant for details on our Client services. Or check out the ProEdge Marketing video for more info https://vimeo.com/130771616