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09-20-2013 10:33 PM - edited 09-20-2013 10:34 PM
Let's say a grower has a 200+ bushel/acre corn crop still stand in the field, 100% unpriced.
At this point, there would be no insurance claim due to yields over APH. It appears to me that one option would be to unload the entire crop and take current cash price for it at harvest.
Do any of you see a downside to this plan? Throwing in the towel seems to be a very attractive option at this point. No drying, no storage, no trucking in the middle of winter, no wondering about Flying Unicorn Skittle shooting reports by the USDA or other Goldman Sucks shenanigans.
I don't see any relief for prices in this current environment. Not Frost, Not Hurricane, Not delayed harvest, not SA crop delays....history has proven no one believes a growing crop can be anything by a "Record".
Any suggestions or comments would be appreciated.
Solved! Go to Solution.
09-20-2013 10:46 PM
Endusers know exactly that, they know there isn`t much forward sold, they know insurance prices are set in October, after that the farmer is naked as a Jaybird. Buyers are licking their chops for the big feast in October, when enough of the ham is carved off, then they will have to bid up. But then they can start with the "big crop coming out of the southern hemisphere" malarky.
*Thank you USDA. Thank you for all you do for the farmers with your reports, it`s really appreciated!
* denotes sarcasm
09-20-2013 11:13 PM
just what I thought. I'm screwed. Might as well implement the plan come Monday morning. Got to thinking about my inadequate drying system, noticing all of those big ears hanging on stalks which are hollow below the third node from the ground, thinking about drying and then transferring corn from bin to bin, wondering if I'll come out and see steam rolling off a bin from a hot bin of corn because of the pockets of green corn out there in otherwise dry fields......sitting in an elevator line next winter.
Time to take my medicine.
09-21-2013 12:24 AM
If you have on-farm storage:
sell July futures to hedge the corn....July is trading for 28 cents more than December......since everyone else is going to lock their bin doors after harvest, expect the Dec/July spread to narrow along with a substantial basis rally in Nov/Dec.....that is the time period when you will want to move the physical corn......you should be able to do 25-35 cents better than just selling off the combine in the middle of harvest at the weakest basis levels...
09-21-2013 07:11 AM
One of the local elevator`s average corn price paid in their last fiscal year was right at $6.50, they are paying $4.50 for new corn. This area is a "corn deficit area", a few bins were put up that are yet to see their first kernal of corn due to last yrs dought, I`m just thinking they aren`t going to be all that quick to sell much off the combine for $2 less than they`ve been used to.
The way it appears the insurance guarantee price will be $1-ish higher, depending on yields and yield guarantees and so forth, there might be a $100-$150/acre insurance payment coming? That could provide cashflow. Some corn could be stored and good old fashioned "sealed" for $2/bushel or whatever the loan rate is these days? Seed companies are offering basically 0% financing `til Nov `14. I don`t know where prices are going, but if one has the guts to go past October naked, it could pay off well. Because this downslide of $2 just seems over-done.
But one has to remember we are entering a year that looks like there will be a comfortable carryover supply, so it`s prudent to temper one`s expectations.
You have to look at endusers as having starved themselves in anticipation of going to one of those "all you can eat" Smorgasbords. They are good and hungry, plunk down their money and go through the line 3 or 4 times and get really full. They`re sitting there miserable and the manager comes by with a delicious piece of cheesecake for an extra $3..they are already full and decline. The manager says "I gotta use this cheesecake up, how about $1???" They`re already full so they decline again. The cheesecake is good and 1 hour prior they were never so hungry, but now they`re satisfied...but maybe if the price of the cheesecake drops to 25¢ they`ll find room
09-21-2013 07:14 AM
That is 30K short just for corn with nowhere to put the beans which might be **bleep**ty anyway. 2 12K drying bins with stirrators which means alot of transferring to other 10K bins. All bins are in good shape and easy access. I am considering hauling all of my stuff in and renting my bins out to another grower who is short on storage......so I can bend them over just like the elevator is planning on doing to me...so that is a wash......then I have to factor in the labor, time, electricity to run fans all winter keeping it in condition...
Climbing bins, working on dryers, spreaders and stirrators isn't nearly as much fun as it was 10 years ago.....and I only have one part time hand who is about my age....lmao....good young help is hard to find unless you don't mind hiring welfare bums who prefer to sit around and breed the local single moms, drink beer, do meth and get tattoos . .. and look for opportunities to get on disability or file work comp claims.
09-21-2013 07:29 AM
Well BF2012, you`re lucky to have a 200 bu crop coming. I can tell you one thing the 28¢ Ray is talking about for storing until July isn`t enough. I`d "take my medicine" and play Janet Yellan`s stock market if I really wanted to gamble. Or I`d flat out let it sit naked in the bin with the doors welded shut. But that`s just me.