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Allocating acres

11/16/2012 @ 9:50am

You'd think $8 corn and $17 soybeans would make corn and soybean marketing easy. Not so. In fact, marketing after a drought is more difficult than ever, say farmers.

Four Midwestern farmers share their marketing plans for 2013 and name their favorite market analysts. Then those analysts chime in. Here's their team outlook.

Hunting for acres

For Aron Carlson and his farm partners in northern Illinois (Winnebago), the best marketing move of 2012 was one they didn't make: They stopped selling corn last spring when many market signals said to sell more.

“In a normal year, we'll start selling in 10% increments early in the year, maybe getting up to 30% sold by spring,” says Carlson. “Everything looked so good early, we were thinking a monster crop, and almost sold more. Boy, am I glad we didn't. We have enough corn to fill our contracts, but not a lot to sell at $8.”

Corn on their farms, stretching from the Wisconsin/Illinois border south 50 miles, averaged from 30 to 135 bushels an acre.

Carlson and his three partners farm over 10,000 acres. Most of it is rented; some of it is custom farmed. Usually about 95% of it is corn, but there is incentive to bump the soybean acres next year and perhaps even add wheat.

“Rootworm controls are failing, and we may need some rotation where corn yields drop off,” he says. “Soybeans cost $250 an acre less to grow. Wheat in this area did phenomenally in 2012 – over 100 bushels per acre. The coffee shop talk is that we're going to see more wheat, partly because farmers like that early-summer income.

“Still, it's going to be hard for us to switch many acres from corn. If we can get $6.50 a bushel next fall, I think the budgets are going to favor corn,” he says.

As for marketing the 2013 crop, Carlson thinks the best prices may come early. “I expect a good growing year,” he says. “I think we'll have a big corn acreage number again, 93 to 94 million acres. With a decent crop, we could be looking at $5 corn next fall.

“I think we'll see an acreage hunt in about February, as the competition grows for corn and bean acres. We'll be looking to start 2013 sales then,” he says.

Carlson's favorite market analyst is Bill Fordham, C&S Grain Market Consulting (www.cs-grainmarketconsulting.com) in Ohio, Illinois. Fordham is a retired farmer now in his fifteenth year as a market analyst. He is a commodity broker and does cash marketing for a few neighbors, but the main focus of his work is weekly and occasional bonus reports on the markets. Customers pay a flat $250 a year.

“My advice is to always try to beat the average price of the year,” Fordham says. “I never sell over 10% at a time, and right now my recommendation is to sell in 2.5% increments. With a small crop, it's easy to oversell.”

Here are three of the market movers that Fordham emphasizes to his clients.

1. Crop size. He thinks the current national corn average could come in at 110 bushels an acre, a 25% reduction from the previous year and similar to the 1980s droughts. Of course, that's extremely bullish.

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