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Senior Contributor

Forward contractors......where you starting?

I'm a pretty elementary marketer. I know several readers here are also. Determine how many bushels you will grow, take 25% off that for a cushion, set a desired price and call the elevator when it hits it or to place a bid. I was thinking maybe start at $6 corn and $12.50 for beans. If those sales are cheapest, that will be just fine. Where are you starting at?
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29 Replies
Frequent Contributor

Re: Forward contractors......where you starting?

steering,you could of sold all the corn and soybean for 2012  for over $6 and $13 back in late aug of 2011 why would you sell for that price today??????

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Honored Advisor

Re: Forward contractors......where you starting?

Wheel,

 

A plan is a plan.  Always better than no plan.  I like yours, its a place to start the first 10-25%,  if your wrong and have some inputs covered -----it will not hurt you.

You have a producers plan----------------------------not a traders(gamblers) plan.  There's a big difference,  Both have their place.  A producer has a bigger risk factor to consider.

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Senior Contributor

Re: Forward contractors......where you starting?

Ha! Late August 2011 I was wondering if I oversold for that season the way the corn looked! The drought looked a lot worse than it ended up being though. Like sw said, I'm a farmer not a trader. I don't buy maalox in bulk, I don't pay anyone or an elevator to sell my grain, I don't loose sleep over marketing. I don't sell more than a year out because I don't know my input prices, I don't know what my rent will be if my landlords want a huge raise instead of a standard one or even if they want to keep me on their acres. Longtime handshake deals aren't guaranteed. No way will I offend them and ask for a signed lease now. I'll take my couple hundred per acre in profit and do it again next year. I suppose if I had lots of owned land and storage, I'd sell farther out.
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Senior Contributor

Re: Forward contractors......where you starting?

I don't see anything wrong with your plan, but I must ask what your contingency plan is if we don't reach those levels?  Locally, selling corn for 6 cash means futures have to really to 6.50.  Considering this is where we were in August when old crop was approaching 8, I'm not sure we see this level again especially if we plant close to 95 million acres.  We'll more than likely have a better idea where Federal Crop levels will be Thursday when USDA releases the February report.  The goal should more than likely be to have a majority of your crop priced at levels above the spring planting price for Federal Crop. 

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Senior Contributor

Re: Forward contractors......where you starting?

Ideally, I try to sell 25% before it is planted, like now before a big report or a day we catch a large rally. Then 25% during planting when farmers aren't hauling to the terminals. 25% in the summer with a weather rally or if it is shaping up to look really good, get it sold before independence day. Then keep 25% as a cushion against overselling and in case of a harvest rally. We know all of the determining factors that can influence price. Crude oil, weather, dollar, acres planted, USDA estimates, livestock numbers, etc all affect prices so the plan must not be rigid. It must have a little flex. And it is important to set reasonable expectations for a starting price. Locally here today the bids for fall delivery are $5.60 and $11.99. It is very possible to hit my $6 and $12.50 in my original plan. Maybe i should sell some today at $12 and $5.75 if corn gets there? Idk. The hope is to sell and then go up. I try to use a 25¢ move to sell. Corn- sell at $6. Then $6.25. Then $6.50. Then if it happens to slump to $6.25 again, sell more. And so on. Recently I have also tried to make more frequent sales in smaller amounts. Same with beans. The main thing to make it work is pay attention daily to market movers and never oversell. Last year I averaged prices of about $6.40 and $13 on my crop. Right off the combine to the truck to the terminal. Little stress, decent profits.
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Veteran Contributor

Re: Forward contractors......where you starting?

After getting raised in rent more than expected on a 320 late August, I sold half of expected production for a little over six. Since then I've sold 15 percent of expected production on the rest of my corn ground. HTA 5.80-5.84. I've got about 25percent total sold. Waiting to see what crop insurance price will be.Hope to around 40 percent sold come planting time and 80 percent sold come the 4th of July.

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Frequent Contributor

Re: Forward contractors......where you starting?

What does wondering if oversold on 2011 crop have to do with selling 2012 crop for $6 and 13???If you forward sell you think your a trade???your telling me you and your landlord have not discuss rental rate by aug 15?????What the hell are you talking about asking for a sign lease??????Hey,steering we are not in the 60's.Wow you need help.Did daddy cut you off?????

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Frequent Contributor

Re: Forward contractors......where you starting?

Ah, such a great example of why this site went to pot.  A nice rational conversation overshadowed by one asinine post.  Only a coward makes personal attacks over the internet.  As far as the subject at hand I think a scale up approach to forward contracting is not a bad approach.  Each person needs to evaluate their own risk tolerance.  I'm personally trying to utilize more tools than just cash sales during these volatile times.  I think one needs to try and be flexible to capture market volatility when it moves in their favor.  Obviously it sounds easy but it certainly isn't easy or free.

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Honored Advisor

Re: Forward contractors......where you starting?

Are things really that bad in Northern Iowa?

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