If you are anything like me, as summer approaches and school lets out, your mind is thinking about a summer vacation. Now I know livestock producers out there are thinking, “there is no vacation when you have animals,” but stick with me on this.
The grain markets have already been crazy volatile this year. Corn prices are currently $1.30 above the spring crop insurance price. Soybeans are $1.00 above the spring crop insurance guarantee. Wheat is $4.00 above the spring price. As we progress in the growing season, these markets will be especially sensitive to weather and international news.
The risk is great, and so is the reward. What are you doing to manage these levels and protect that equity on the table?
Now is not the time to go into “vacation mode” when it comes to marketing your crop.
As Ben Franklin is quoted as saying, “If you fail to plan, you are planning to fail!” Here are some other thoughts to consider this summer to stay on point whether you are working or relaxing. Consider these six pre-vacation “to-do’s” as your checklist:
Do you have bin bottoms left to sweep? The market is incentivizing you to do that soon! After all, that may be some “extra cash” for that vacation you have planned!
Are you marketing what you planted this spring? That may be the “sun-screen” that protects from lower prices and locks in the great margins when considering the higher inputs for 2022. Percentages matter. Having a little sold at the highs will not make as much of a difference versus having a higher percentage of your whole crop protected if prices drop. Look into other tools outside of sales and keep flexibility in the marketing plan for your operation.
Have you been talking with your broker and/or grain buyer? Do you have offers or open orders in place at levels where you would like to make more sales? With recent updated daily limits of 50 cents in corn, $1.15 in soybeans and 75 cents in Chicago wheat, prices can change fast. If we are close to a level that could hit in an overnight market, be ready because by morning the market could look completely different. Are you sticking to your marketing plan and staying disciplined despite volatile markets and recent black swans? Do you have a marketing plan to use as a road map? Perhaps it’s time to reach out for help.
Sunglasses and binoculars
Are you looking ahead to potential sales for 2023 crop? Pack your sunglasses because it looks bright out in 2023. There are great prices/opportunities for a crop that is a year away. Your binoculars show clearly that December ’23 corn traded $6.33 ¾ this morning and has rallied nearly $1.50 in the past 6 months. November ’23 soybeans were $14.12 and have rallied around $1.25 in six months. July ’23 wheat was $11.03, up almost $4.00 this year.
These levels sound fantastic from a historical perspective!
Make a call to input suppliers to see when you can start locking ‘23 inputs in. Knowing what those prices may be will help you run the numbers in your operation for break-evens. Do these crop price levels “pencil” and are they something you need to jump on?
Contact your financial institution
Now is the time to stay connected with your lender. Are you using or increasing a marketing line of credit as it relates to higher prices? Higher prices and higher input costs require more capital as you know, especially as you manage two or more crop years at once. Discuss the opportunity and challenges ahead of time with your lender. Don’t wait until you are forced into that conversation by the market, or because your back is up against a wall. Having sufficient funds for your farm (or for your vacation) is important in an inflationary world.
Your operation is surrounded by professionals you trust to help manage these details. If you are missing a key piece, reach out and look for help. You wouldn’t go on vacation without certain important items, would you? Now is the time to make the calls, lay out a plan, lean in and sharpen your pencil.
Are you getting ready before you go into vacation mode? Change happens fast, so be prepared for whatever happens to the markets this summer. Enjoy your vacation, I hope it’s a good trip!
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