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Marketing Academy & current trade

10/31/2013 @ 11:03am

As the corn market continues its downward spiral towards $4.00 per bushel, farmers are faced with a much different approach to grain marketing in 2014. 

To make matters worse, next Friday's USDA Crop Production Report isn't expected to provide any fuel for the bulls, with a possible all-time record-high corn crop estimate expected.

In the past few years, farmers had the luxury of making few marketing decisions, because the rising prices came to them. Not so this year. For this reason, farmers are going to need a marketing plan to stave off a below break-even trade.

Several of the students who have completed the Successful Farming Marketing Academy are reporting how they're using the important concepts learned at the Academy to make better decisions. 

"What I learned at the Academy gave me the confidence to get some of my corn hedged ahead this spring," says Jerry Pauman, a central Minnesota farmer. "It was above my cost of production and above the government crop price guarantee. It will be the most profitable corn I grow."   

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A segment of the Marketing Academy narrows in on grain marketing decisions. In that class, we evaluate how to sell and the benefits and disadvantages of each method you can choose. The class also explains the production and market risk you take on when making your marketing decisions. 

Andrew and Joe Mauch, two corn and soybean farmers from North Dakota, are now using futures hedges to capture the large carrying charge in corn and the basis improvement. "I now understand how to do my marketing like a grain elevator. I rolled my December hedges out to July at a 28-cent carry. I expect the basis to improve by at least 30 cents from now till next June. That 58 cents additional income on 180-bushel-corn is an extra $100 per acre in income. Even after I take off my additional costs, I still will net an extra $80 per acre," Andrew Mauch says.

He adds, "When you get corn futures below $5.00 per bushel, that extra $80 per acre doubles my profit margin. Now, with lower prices and tighter margins, it is more important than ever that you understand more about marketing.” 

Meanwhile, Joe Mauch says the Marketing Academy has helped him put all of his grain marketing plans together. “The class helped me put it all together.  I know how to make better decisions and how to use my bins,” Mauch says.

Al Kluis, the co-instructor of the class, says students of the Marketing Academy are able to take the information and make better real-time decisions in a year when lower prices had put pressure on farm profits.

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