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Winter markets

Agriculture.com Staff 12/11/2009 @ 10:12am

The approach of the holidays normally means that harvest is over and the bin doors are locked until spring. Some farmers who have not planned well may be looking to sell grain for cash-flow purposes. However, most of us have been in the business long enough to have cash-flow planned so that we do not have to make sales at depressed prices that usually come in the dead of winter.

The normal price pattern for the winter is for soybean prices to deteriorate from the highs made on the 'dead cat bounce' in November or early December. Corn futures prices normally are flat with the cash price appreciation coming from basis improvement. In the growing season of 2009 very little has been normal. It appears that will be the case as winter progresses as well.

This year, the flow of grain from farmers to markets was delayed drastically this week. The cause was snow, not the usual marketing and cash-flow factors. Here in Cass County, we had 11 inches followed by high winds. The county road by my place was blocked for two days. It will be many more days before driveways will be opened up enough for grain trucks to travel. Some might say that no more grain will be delivered this winter. I doubt that that will be the case because most bins are filled to the peak. Some of that will need to be taken off to prevent spoilage of corn that was not quite dry when it was put in.

Corn basis has slipped rather than improved as it typically does. I imagine that is being caused by the problems in moving the grain, not only from farms, but also from elevators that have piles on the ground. Those of us wanting to deliver grain may have to accept a poor basis just to move grain that needs to be moved. It will be more important to maintain condition than to get a top price for the commodity.

The reaction to this week's government report was positive. Even though some of the numbers were bullish and some were bearish, price response following the report was mostly higher. This is friendly action, considering the seasonal trends mentioned above. For those who can wait to make sales, my bias is to wait until after New Years to pull the trigger. If you need cash flow before the end of the year, selling any day when the prices rally is not a bad idea.

Looking at the prices offered today, most of us are profitable with the big crop that we produced in 2009. I do not like to sell in a holiday season. However, I do like to sell at a price that results in making money. Murphy says "When the plate of cookies goes around the table, don't forget to take a couple". That could be the rule for marketing this winter!

The approach of the holidays normally means that harvest is over and the bin doors are locked until spring. Some farmers who have not planned well may be looking to sell grain for cash-flow purposes. However, most of us have been in the business long enough to have cash-flow planned so that we do not have to make sales at depressed prices that usually come in the dead of winter.

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