“You’ve got to be very careful if you don’t know where you are going because you might not get there.
The above quote is one of many attributed to the late great Yogi Berra, which had to somehow find a place in this week’s grain blog.
The much anticipated USDA October Supply & Demand report came and went Friday with not enough surprises to be considered a game changer for either corn or soybeans. The corn yield was moving .5 bushels higher when most were expecting at least that much of a reduction seems to be attracting most of the conversation, especially with the Eastern Corn Belt seeing quite variable yield data. The harvested acres in soybeans dropped 1.1 mln from the September report with the average trade estimate only expecting a .6 mln acre drop. This provided the news necessary to support values near the high end of the recent trading range.
It now feels like corn will have a tough time pushing the nearby December contract above $4.00 and $9.00 on the nearby November soybean contract still feels like a tough hurdle to get over and push higher. Since the September report, corn has been trading in a 25 cent range from $3.75 to $4.00 and, as I write this, we currently are trading at $3.81. The trading range for beans over the past month has been $8.60 to $9.00 and currently trading at $8.89.
Decisions need to be made, based on the information we have today, at what values do we price additional bushels. Obviously this will vary from one producer to another, with the biggest variable being how much of the crop was already sold prior to harvest. Looking back with perfect 20/20 hindsight the best time to sell 2015 crop was last December, and about a week in July when excess moisture in the Eastern Corn-belt provided enough unknowns. That those with short positions rallied the market high enough to allow producers to make profitable sales.
It is nearly impossible to know when these opportunities will present themselves or what news will spark them. It is possible; however, to know your cost of production and know what a profitable sale looks like. Generally speaking, when the market provides an opportunity to sell this year’s crop, it is a good time to consider selling a percentage of next year’s production as well. December 2016 corn has defined a 60 cent trading range from a low of $3.85 seen just prior to the September USDA report to the high of $4.45 we saw the middle of July. Today we sit at $4.06. November 2016 soybeans traded as high as $10.30 last December and as low as $8.60 just last month, and currently trading at $8.97.
I would encourage all producers to have a written marketing plan. This plan should include plans for unsold 2015 bushels. How much of 2016 crop you are comfortable selling ahead and at what values, and I would tell you it is not too early to get something in writing regarding marketing 2017 production. Looking for opportunities over 2 to 2 ½ years makes sense and can provide some peace of mind compared to now hoping that the next nine months gives us a chance to wiggle off the hook.
We continue to hear of outstanding yields which can present some nice problems to have. Give us a call if you need help with extra bushels unable to be stored. Harvest will continue at a brisk pace, so please be safe as we finish up “harvest 2015” over the next 4 to 5 weeks.
A few more of my favorite Yogi-isms: “When you come to a fork in the road, take it” “Baseball is 90% mental, and the other half is physical.”