A Deer in the Headlights
Pricing grain any time of year is difficult. It can be especially difficult when prices are rallying and the outlook remains friendly. How much to price? When to price?
Sound familiar? You’re not alone. Many of our clients have suddenly frozen, uncertain of what to do. They are standing still like the proverbial “deer in headlights” in the wake of a voracious price move in corn futures since this summer.
While some are lamenting hauling in corn sold for $3.75, there are many who used the various marketing tools at their disposal and have re-owned that corn, turning that $3.75 sale into $4.75 or better. For those of you who still have corn to sell, remaining frozen like a deer in the headlights is not OK.
It’s time to do some math.Think about the profits (overall price per bushel) you have now. Analyze if this is the right time for your operation to make some cash sales. If it is, then feel confident about the choice you’ve made. Remember, if you decide to make cash sales, and you want to still keep upside potential, consider re-owning your corn.
Below is a chart which describes seven types of re-ownership ideas, based on risk tolerance, reflective of prices as of November 2010. A good advisor should work with you in advance of any decision, determining your risk tolerance, and explaining the costs of each transaction as well as the impact of each decision on your overall price per bushel.
Remember, marketing is how you get paid for your hard work. The Market Scenario Planning we do for our clients is hard work, and those who take time to do that work, and execute, will reach their goals. There is a price surprise around every corner, so be confident and ready.
**All of the above are subject to commissions and fees.
The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures trading involves risk of loss and should be carefully considered before investing. Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2010 Stewart-Peterson Inc. All rights reserved.