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Senior Contributor

Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

A good article by Jerry Gulke. I liked the results on the survery/poll on marketing, it gives you a chance to compare your current marketing positions to the other farmers. Worth the read and the article is below:

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Should 2013 be a “Do-Nothing” Marketing Year?

 

April 6, 2013

 

Selling out of the field has paid off the last few years. "Last year, nobody sold anything, then we got a drought and the price of corn went up $3 in five or six weeks," says Jerry Gulke, president of the Gulke Group. "If anybody had cash contracting, they wish they hadn’t done that."

                        A recent Farm Journal Pulse asked: How much of your 2013 corn production is sold or priced?

Here are the results:


2013 Corn Production sold or priced

       None: 53%

       1-25%: 24%

       26-50%: 11%

       51-75%: 4%

       76-99%: 3%

       100%: 4%

(1,600 respondents -- see the results on an interactive map)

We asked the same question at this time last year. Here are those results:


2012 Corn Production sold or priced

       None: 45%

       1-25%: 30%

       26-50%: 14%

       51-75%: 7%

       76-99%: 2%

       100%: 2%

(1,400 respondents -- see the 2012 results on an interactive map)


"In all honesty, farmers have been right to not forward sell much of their crop," Gulke says. "If you don’t want to learn futures and options, you do nothing. And the last couple of years, the best thing to do was ignore everybody’s advice and sell out of the field."

But, this year is already different from 2012.

"Last year we had to take prices higher to curb demand," Gulke says. "And, this year we’re going into a crop where we’ve already terribly curbed demand. Exports are less than half. Feed usage is down. Ethanol is down. You’re starting out with a low expectation of demand."

He says that if a reasonably sized crop is produced this year, we will have an oversupply

We sometimes lose our focus when money has been too easy to make," he says. "I think that’s what we have in agriculture. You didn’t have to be a good marketer last year to make money. But, I think that’s changing."


Reports on the Horizon

On April 10, USDA comes out with its monthly Crop Production and World Agricultural Supply and Demand Estimates reports.

Gulke says the big news in this report will be where USDA decides to put the 3 million extra bushels of corn it found in storage with last week’s Grain Stocks report.

"Where will they put all those extra bushels of corn they found last week?" he asks. "Will they put it in feed usage, or just go right to the bottom line?"

Gulke says this "new" corn will actually put the U.S. ahead of where it was last year at this time in terms of corn usage. "And we thought we were going to run out last year," he says.

 


 

 

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7 Replies
Advisor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

RSW,

 

Be careful how you listen to all these "experts". Most of them will make your head spin. Figure cost of production and then when you reach your desired ROI, pull the trigger.

 

A lot of these guys are never wrong bcause they keep you covered up with options.

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Advisor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

Sell at least 25% on the coming spring rally

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Senior Contributor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

Yes 425Cat. All the advice these so-called "EXPERTS" give can get you really confused. As you said when you reach your desired Return on Investment Ratio for corn pull the trigger. I am lucky to have a rough total COP (Cost of Production) for my new crop corn of just $2.75 per corn bushel, and that includes my $150/acre Custom Farming cost. $6 new crop corn would put my ROI in the 7% range which is 1% higher than the 50 year average for the corn ROI. Being that the average range for the Corn ROI is 4 to 6%. I can live with a 7% Corn ROI for the 2013 corn crop. Even $5 corn is a rough 5% ROI which considering the past 50 years of data falls in that range. I maybe trying for $6 cash new crop corn, but if that doesn't happen, maybe we can still get $5.50 cash as the crop year goes forward. $5.50 new crop cash would be a 5.75% ROI, which considering all issue isn't really 1/2 bad. This is all based on a normal yield, a 20 to 40 bushel per acre yield drop would change all these Corn ROI to the downside. I think my goal is to have maybe 33% of my corn production sold/hedged by July 30, 2013. Seems like a good conservative thing to do considering last year I had 0% sold till the August/September 2012 time period. That was a pretty risky thing to do last year, but it obviously worked out well.

 

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Veteran Advisor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

SOUNDS LIKE A BRILLIANT man..............

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Advisor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

Cx1--you referring to Gulke or rsw? Inquiring minds wanta know!
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Senior Contributor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

bkadds- C-X-1 is referring to me of course!!!!!!!!!!! LOL

No, I know some guys on this website think I am an egotistical idiot, but you can't try and please everyone. That is one thing about farming, you are your own boss (although my wife thinks she wears the pants in the family, but that's an entirely different subject!!!! LMAO!!!). And really, Mr. Computer is your only boss, unlike working as a wage-slave for some big company. I did the wage-slave thing back in the early 1980's to make some money and hated every minute of it. I was trapped in some little office cubical just 10 feet by 10 feet without even a window to watch the weather. The only good thing about working for a big company was that there were some very attractive young ladies working there, other than that it was the pits. No in farming, your real boss is your computer and your farm operations Return on Investment Ratio tells how you are doing being a farm manager. I have noticed one thing about farmers over the years and that is that most would really hate just being a little cog in the wheel working for some big company. One of the main reasons they got in farming is that they wanted to be there own boss and would absolutely hate reporting to an actual boss like city people do. Anyway, I plan to have 33% of my new crop corn production sold by the end of July/2013 this year. Unless something like the drought continues and that is way to hard to predict. I suppose the Chicken-way to do this is to forward contract 33% of your 2013 corn with the ethanol plants and then buy call options or straight contracts to cover that huge possible upside risk in case we do get weather issues and that sends corn to $8+ again. Guess I would call these call options, "COURAGE CALLS" to help you actually pull the trigger for new crop corn sales this summer.

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Veteran Advisor

Re: Should 2013 be a “Do-Nothing” Marketing Year?/By Jerry Gulke/2013 Marketing Survey

no, not rsw, i was facetious about the article------forgive me---about the opinions of the "expert"

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