What ya gonna do?

[kyjlong]

I asked this elswhere, but would like some more suggestions how to capture higher prices for next fall.

What is your plan for marketing 2013 with a brutal inverse in the markets?
Do you just sell some next fall corn with a $1 less than today, or beans with a $2 discount to today?
Do you use futures and sell the nearby and buy the deferred?
Do you sell some March or Jan and roll it forward as they approach delivery period?
Do you double roll-Sell Nov & Jan, rolling the Nov to Mar, then rolling the Jan to May on down until fall?

Do you start now or do you wait until...?

Someone must have a process they use in this situation.

Suggestions without flaming other suggestions, please!

[Palouser]

If I think markets are likely to rise into the winter (I'm a small grain producer) then I assume that next year's prices will rise also (they always do). I will forward contract physical deliveries old crop after the first of the year for tax reasons and new crop deliveries as I see fit. As a 'pirate' marketer I will delay pricing under these circumstances if i think there is likely to be a continuing supply market and weather markets in the future. 

There are too many questions that need to be answered for me to price for next year at the moment. But, that's just me and I wouldn't recommend anyone do it the way I do it.

[kyjlong]

is my problem in selling also. My current marketing strategy is to be long Mar12 beans. At sometime I have to have a mindset to sell. The questions remain as to when, where, and how!

[Jim Meade / Iowa City]

In the big picture, U.S. is uncertain on weather for next year.  Not sure El Nino will be fully established, so could have an iffy year.  We can bet the anyone who can grow grain will, including South America.  

1.  South America has a bumper crop, U.S. has bumper crop

2.  SA has bumper crop, U.S. has average or poor crop

3.  SA has average/poor crop, U.S. has bumper crop

4.  SA has average/poor crop, U.S. has average/poor crop

What do you see as the chances?

One totally wild guess for the above and the consequences is:

1.  10% - prices fall hard

2.  30% - prices fall but not too hard

3.  30% - prices fall harder

4.  30% -0 prices rise

If you look at it this way, the chances of prices holding steady or rising is not as good as prices falling.  If you have different assumptions, you'll get different outcomes.

I'm not pricing an '13 as of now.

[sw363535]

The market sees it that way Jim,

the $1.20 lower price dec 13 spins  it that way.

I am having a hard time cheering for another $3 fast up market-------------trying to imagine the conditions that will support it.

I realize there are chart histories that might support it,  and printing enough dollars might encourage it. but we gotta raise a crop eventually.  This weather  is gettin really old.  Third hottest year on record and one of the other two was last year----- A little demand destruction is the least of our worries if we ring up another bad year.

Betting on historic drought should--------------eventually turn into a long shot.

For 2 drought years in a row we have topped out in the $7.5 to $8.5 corn range prior to harvest.  Not sure what drives it higher.  

I can see wheat and beans gaining some value, but corn looks awful strong in the $8-8.5 range.

Time has a view that is hard to disagree with.

[timetippingpt]

---

@JIM Meade / Iowa City wrote:

In the big picture, U.S. is uncertain on weather for next year.  Not sure El Nino will be fully established, so could have an iffy year.  We can bet the anyone who can grow grain will, including South America.  

1.  South America has a bumper crop, U.S. has bumper crop

2.  SA has bumper crop, U.S. has average or poor crop

3.  SA has average/poor crop, U.S. has bumper crop

4.  SA has average/poor crop, U.S. has average/poor crop

What do you see as the chances?

Jim:

   I think statistically the odds are more likely to be:

1. 70% - prices retrace to the lows of last fall

2. 10% - prices fall hard back the June lows

3. 15% - prices still fall but chop sideways alot

4.  5% - prices chop violently up and down all year, but new highs are still illusive.

This is called the "corn belt" for a reason. It tends to rain alot. The pattern is clearly shifting to the west as it always does. Next year is likely to have a cool and damp summer.

[nutlug]

Don't know which pattern you are watching, but the last two years were hot and dry in the west. Looks like it shifted to the east this year!

[sw363535]

Great entry nutlug,

Our 2011 heat didn't move east to missouri this year it went north into nw ks & neb.  The graph makes it out to be a small area around missouri which was drought more than excessive heat.  The picture is just too small.  The west did not improve in 2012. The problem got bigger, moving north and stayed just as dry.  The excessive heat is still in w ks and neb.  And you have to get south of Amarillo, Tx to see anything close to average rainfall again this year.  If the pattern follows and moves as slow as it did the last 3 years----Iowa and Illinois will get worse in 2013 and barge traffic will need a canal from chicago to supplement the river.

Sw is cutting some decent corn because we adjusted by concentrating our diminishing water on fewer acres-------------overall that still means less bushels.  

[Palouser]

Funny hoe people see thing differently but, just for the sake of argument I'd say of your 4 scenarios, #2,and #3 keep us in the danger zone and #4 leads to disaster. Number one, if followed by good production after could leas us out of the supply problem - or not.

[nutlug]

In 2011 we chopped 100% of our corn, all dry land in central Kansas.  This year we chopped 45% and picked 55%.  The stuff we chopped appraised from 0 to 11 bu per acre and the stuff we picked was between 30 and 40 bu per acre.  Late planted milo looks good and the soybeans really benefited from a couple of late rains.  A lot of wheat is going to be planted this fall at the expense of spring crops next year.  I know I should be pricing at least 10 bu per acre of 2013 wheat but as dry as it still is and as close as we came to not making a wheat crop this year it is hard to do.  How much winter wheat is going into failed corn acres in the heart of the corn belt with the idea of double cropping beans behind it next year and how will that affect wheat prices next year ?