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BA Deere
Honored Advisor

David Kruse "Don`t sell new crop!"

Futures doesn`t reflect the basis, futures haven`t been working.

https://www.buzzsprout.com/889474/11116173-08-10-22-stop-selling-new-crop-corn-soybean  

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6 Replies
Hobbyfarmer
Honored Advisor

Re: David Kruse "Don`t sell new crop!"

Wrong, wrong, wrong, don't you know that by now you are supposed to have at least your Fed crop guarantee bu sold?

Don't worry about basis, don't worry about surcharges for shortfalls. Sell, sell, sell ahead. What could go wrong?

 

rsbs
Senior Advisor

Re: David Kruse "Don`t sell new crop!"

Mankato ADM soybean bid $14.75, CHS Savage bid $15.80, CBOT price about $14. Local coop price $14.13

Yeah, beans know. Guys with Semis and time can pick up over $1500 a trip right now. "Hot export market" is what the grain buyer said.

Righteous bucks!

BA Deere
Honored Advisor

Re: David Kruse "Don`t sell new crop!"

Think of all the "dippsy -doos"  that pricing the `22 has had and it`s a couple months from harvest.  The half full bins will sit 8-10 months after that awaiting the trip to town.  You literally go week to week saying "Dang, well I missed it!  I shoulda sold the APH last week"  to "Stupid stupid stupid why did I sell???   It`s goin` to the Moon and I`m missing out".   "Buyaput  Buyacall".  

Bubba Horowitz was on with Chip saying "the crop isn`t there, I`m short now, but ready to go long".    Results of the Pro Farmer tour will be more anticipated than the Sports Illustrated swimsuit edition used to be.  Things look good here, but....   We needed for the `22 crop to be a homerun with all the tumult in the world, harvest it and they will come and pay you good for it.  

Pockets are deep, incentive for storage into 2023 will be great, the stars are lined up.   But you all know what happens when too many are on one side of the boat  😀

BADeere_0-1660214601295.jpeg

 

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erikjohnson61y
Senior Advisor

Re: David Kruse "Don`t sell new crop!"

First thing to remember is that you cannot sell everything at the peak, but it is easy to sell everything at the bottom!

Once you accept that you can't sell it all at the peak, you aim instead for an acceptable average price. I know everyone has their own system, so this isn't advice, just what I've found works for me. I have bin space for all my beans but only 2/3 of my corn. But corn typically gives more clear marketing opportunities than beans. I start with the spring guarantee price as my floor. This year it was 5.90, so I started selling new crop in May when it got higher than that. By the end of May I had sold 1/3 of my APH at an average of $6.32 (cash price, not board price, so a little extra basis cushion). Come harvest time I'd deliver my contracted bushels and bin the rest for sale during rallies the following year. Sometimes the new crop bushels would be my most profitable bushels, and sometimes not, but I had it locked in at a profitable price. Now this year it looks iffy whether we will even get a 1/3 crop around here. So when the prices dipped some in July, I bought new crop call options not so much to participate in any rally, but to cover my butt against having to write a deficiency check if I'm short and prices far exceed my $6.32 average price. I was basically willing to give up 20 cents on my new crop contracts to ensure that I didn't have to write an out of pocket check for whatever if I am short. 

As for the stuff in the bin, I take the same approach. I decide what a minimum profitable price would be, and when the local elevator offers that price, I start making small sales. The goal is to "feed the rally" and make small sales as the prices rally into June (usually). If you do it right, you'll sell a load or two at the peak and then the rest of the bin on the backside of the peak.  The trick is to make small enough sales that you don't run out of loads before the rally runs out of steam. For the 2021 crop in the bin, I started selling at $6, and peaked with a load at $8 and another at $8.05, then emptied the bin at around $7.40 in July. I averaged $6.77 for all the bushels in the bin, and was happy with that.

For me, having a plan and strategy makes pulling the trigger on a sale a lot easier, and avoids the woulda-coulda-shoulda, and I'm also not driven by the "gotta sell a couple loads to pay the bills" approach that I used to have 10 years ago.

BA Deere
Honored Advisor

Re: David Kruse "Don`t sell new crop!"

It seems like the top will be easier (less difficult) to pick than the bottom with the 2022 crop.   Price drops are "bear traps"  😀   I sold 15bu/acre of new beans earlier this year just short of $14, the way it`s looking, that could be 20% of my God willing production.   Just to document my emotions on that sale, I`ve never been comfortable with it, even though short spurts of time it`s been $1 or more higher than bids. I just have a gut feeling it will be my lowest bean price and if the elevator asked if I wanted to cancel the contract with no penalties, I would do it.  

It`s not to say that in most years that if you are offered a early profit that you should lock it in at least on a fraction of anticipated production, but 2022 is a different animal.  Question is will cash beans in my area be: below $13 a dollar lower than my contract or $16 $2 higher than my contract?   Or pennies one way or other of my "$14"?    If it`s $1 lower, that`s $15/acre not a grandslam.   If it`s $16/bu beans, my contract was a $30/acre mistake. 

I haven`t done anything with corn and I am well satisfied rolling the dice selling some, storing some.  And I certainly won`t do anymore with bean sales regardless of price.  

We are in a drought market, even though it`s been a year of haves and have nots.  However we needed a homerun year.   Bubba Horowitz is in the "peak grain camp" yet currently short the market, knowing not to swim against the tide of the market.  

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rsbs
Senior Advisor

Re: David Kruse "Don`t sell new crop!"

seal the bin doors until you get $7 cash corn and $16 cash soybeans.

those are the new numbers with $400 rent, $250 fertilizer, etc.

And like Packard says, don't sell the farm.

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