With corn and soybean prices at very low levels, there are very few options for selling any of that grain. If, however, you need to generate some cash flow, Mike Silver, with Kokomo Grain, says there are some options, “If there are corn or soybeans that need to come to market that are unpriced, one could consider putting them on a basis contract. You could then get an advance against that futures contract. That way you are still long the market but can get some needed cash flow.”
Silver says another option might be to look at minimum price contracts, ”Those can be created by selling the cash market and attaching a call option feature to it. You could also put a put option feature on the contract to put a floor under the market in case the market goes down.” He added, over time, the put option will increase in value, and you can also get an advance against the contract to generate cash now.
As for pricing strategies for new crop, there are even fewer alternatives. Silver suggests locking in the basis, “If the crop is as big as we anticipate it will be, the posted basis prices are probably going to be wider than they are today
by the time we get to harvest.”
For the rest of you, Bob Utterback says start preparing your plan for 2019 and be ready to grab a rally when it occurs next year, “This market being so distressed I don’t think acres will be increased domestically in 2019. And with the world demand base for corn now down to 151, the market is going to be very sensitive to weather next May, June, and July.” He told HAT farmers need to be prepared mentally and have a plan for how they are going to take advantage of the sensitivity next year, should the market rally.
You can hear Mike Silver’s and Bob Utterback’s market analysis regularly on Hoosier Ag Today radio stations around the state.