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Corn Producers Have a Lot to Think About for 2019 Marketing
Most corn producers will be harvesting sooner than usual, as this year’s crop is running one to two weeks ahead of schedule. Expectations are for record yield.
In theory, this could pressure prices over the next couple of months. Yet, 2019 looms on the horizon, which suggests preplanning for the year ahead.
Was there anything learned, so far in 2018, that can help guide marketing decisions in 2019? One might suggest the rapid drop in prices in 2018 reinforced just how quickly prices can fall apart.
One week you feel you should not have sold anything, and the next week you feel you should have sold everything. Too much opportunity lost too soon.
Preparation for the year ahead starts now, as harvest approaches. Typically, the fall months (when a harvest low is established) is an opportune time to buy call options for the next year’s crop.
Why buy call options? When too little corn was sold at good prices, you’re left trying to figure out what to do with a lot of inventory.
To better balance these emotions, purchase call options to cover cash sales you intend to make. (A call option gives you the right to own futures but not the obligation.) With call options in place and setting specific target points above the market, you are prepared to sell rallies.
Yet many don’t do this. Why? Fear is often the emotion that holds producers back from doing the right thing when it comes to marketing. In this case, selling rallies. Fear of selling too soon is problematic. Selling too soon at the start of a price rally is an isolation problem (emotionally based).
The key to good marketing is not only preparing for opportunity, it’s also the discipline and willingness to follow through with it.
Successful marketing doesn’t come easy, and there are no guarantees. Those who work hard at it by implementing, preparing, and then managing their positions increase their odds of success.
Over time, they will likely have a consistently higher price and comfort zone with less emotion, allowing them to make good business decisions for the farm.
If you have questions or comments, contact Top Farmer at 1-800-TOP-FARM, ext. 129, or ask for Bryan Doherty.
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