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Prepping for the New Crop Marketing Year
Corn futures have traded in a sideways pattern for much of the past year, failing to muster much of a rally, with a high for December futures occurring in July at $4.17¼. The low for the year occurred in June at $3.74. Most of the time, December futures have hovered in a relatively small trading range near $3.90. By some accounts, a very boring year and not much opportunity. Yet, don’t fall asleep at the switch. Rallies have been viewed as opportunities to make sales, and as the growing season progresses, rallies have a tendency to be less and less likely.
This year, however, things could be different. We’ve witnessed a challenging spring for planting, pockets of dry weather, extreme heat, and dry conditions during pollination for the western Corn Belt. This year’s final crop yield will be open for debate and not likely solidified until the January Supply and Demand report. Yet, if prices don’t rally, it is important that you look for opportunities even if prices are range-bound. Searching for basis improvement, selling carry, and selling rallies are a few actions to put into practice.
In particular, look at more than just the current year for opportunity. Both 2018 and 2019 corn prices have offered attractive prices to start making sales. A high of $4.29½ for December 2018 corn futures was recently reached, a level that 2017 corn futures have not reached. Consider using hedge-to-arrive contracts, or selling futures at $4.25 or higher, should prices bounce back. As of this writing, December 2018 is trading near $4.18. Consider the same for 2019, as it recently reached a high of $4.23¼.
We realize that selling one or two years out can be challenging and, for many of you, a change. Yet, we are in a marketplace in which production continues to improve year in and year out, barring a weather market. Being proactive may pay dividends that otherwise will not be available if you wait until you are in the current year. Bottom line, stay ahead of the game looking for opportunities!
If you have questions or comments contact Top Farmer at 1-800-TOPFARM, ext. 129.
Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.