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On your mark!

Agriculture.com Staff 03/31/2006 @ 2:50pm

Wednesday evening, I did the last of this season's Winning the Game/Marketing Stored Grain workshops for Dr. Darrell Mark's Agricultural Economics class at the University of Nebraska. It was a pleasant change of pace teaching college students. I like audiences of farmers, but these young people are a breath of fresh air. It is hard for me to realize that I am old enough that my daughter took the same class 20 years ago. It is even more difficult to grasp that when I attended that school 45 years ago, there was no agricultural marketing class!

The strategy that most often comes to the top in the pre harvest portion of the workshop is to divide your crop into segments and sell an equal amount every two weeks, beginning the first week of April and continuing through June. This is done whenever December corn futures average over $2.40 and November soybean futures average over $6.00 for the month of February.

The April 1 starting time begins next week. If you are inclined to forward price grain, you should have your plans in place. Prices so far this year are giving us the opportunity to implement forward pricing at levels higher than were available last year. The February price for December corn was around $2.57. November beans were around $6.17.

Research done for the workshops found that in the years since 1981 when December corn was over $2.40, 16 out of 19 of those years the price dropped by harvest. The average price drop was 30 cents. Similar research showed that in the 10 years since 1984 when November beans were over $6.00, every year the price was lower in November. The average soybean price drop was 85 cents.

There is a lot of hype in the markets now indicating that a major bull market in grains is just around the corner. The metals and energy futures have certainly had a nice run. There is always the possibility that grains will follow. However, we also must realize that grains are a renewable resource. We have the ability to produce huge quantities under almost all circumstances.

It is not wise to totally ignore historical trends. I never suggest that anyone forward price 100% of an anticipated crop. If the current rally continues, spreading the sales out for the next two months for at least a portion of the crop will lock in an average that is acceptable. After today's report, it appears that it will be possible to forward contract 2006 corn for a dime more than the February average. I think it is also a good management strategy to have some to sell later in the event that this turns into a major bull market.

Wednesday evening, I did the last of this season's Winning the Game/Marketing Stored Grain workshops for Dr. Darrell Mark's Agricultural Economics class at the University of Nebraska. It was a pleasant change of pace teaching college students. I like audiences of farmers, but these young people are a breath of fresh air. It is hard for me to realize that I am old enough that my daughter took the same class 20 years ago. It is even more difficult to grasp that when I attended that school 45 years ago, there was no agricultural marketing class!

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