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Veteran Contributor

lo and behold

With today's 30+ cent move I can finally sell 2012 cash corn off the combine for the same price that I sold it at last Aug. 22.  It only took at the minumum a disaster in South America and a 25 year drought across the corn belt.   But selling last Aug was not very smart according to the super bulls.    

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7 Replies
Veteran Contributor

Re: lo and behold

New Crop (NC) Dec 2012 Corn prices are now nearly $.60 above the August 31, 2011 prices you referenced.  What are your thoughts on pricing some 2012 NC corn?

 

This has been one heck of a "BULL" run but now the question is how long and high will the bulls run?

 

I feel the crop conditions in the next report in conjunction with the value of the dollar (it is a little weaker today) will have a lot to do with where we go the first half of this week. I saw where some in the trade are looking for the G to EX category to fall 5% on corn in the next crop progress report.

 

We are too dry hear to take advantage of the recent price movement other than possibly buying put options to protect the downside of our crop insurance harvest price.

 

Hope you caught some rain this past weekend.

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Senior Contributor

Re: lo and behold

Good job dismal I am happy for you. You should have a good average price.
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Veteran Contributor

Re: lo and behold

Citi,

 

In order to get the price for 2012 that I recieved,  I had to sell march futures then roll to july and finally rolled to Dec 12.   That is how I achieve a 7 dollar + futures prices for Dec 12 corn.   It started out as an 7.90 dollar march futures sale.    I haven't set the basis yet.  In my area we are historically -.75 basis so should end up 6+.   This was the only cash sale I made where I signed a contract with the elevator.   About 1/3 expected production.   Sold more on futures but have since offset at profit.   

 

I am going to watch both the market and my local rain forecast very close this week.   Will add sales with additional rain or additional price.

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Veteran Contributor

Re: lo and behold

Dismal, I'll bite.  I'm not criticizing your August sales,  but merely discussing them.  You tied yourself almost a year ago into a contract for 1/3 of your expected production.  You didn't know what your crop insurance rate was going to be.  You did not know how Europe was going to turn out.  You did not know if we were going to have the driest Aug.-March in recorded history and you did not know that 2012 was going to be the hottest year on record worldwide.  You did not know if inflation was finally going to take off and make the US resemble the Weimar Republic.

 

I could go on and on, obviously.  You took a shot and good for you, you made it.  

 

Right now we know alot more about our own individual economic perspective for 2012 crops than we did in Aug. 2011 and we can get the same price or maybe better in the days ahead. 

 

Were your contract's risk management or acceptance of risk?  Depends on how you look at it.

Veteran Contributor

Re: lo and behold

I had a third of my fertilizer bought. I had 100% of my rented land base under contract. Cost fixed on owned land. Machinery line sitting in yard. So at least 75% of cost known. Corn futures in the top 1 or 2% of all time. Personal moisture situation fine. Was actually more concerned with gettin tile in. I actually don't tie my selling decision to crop insurance so that wasn't big concern. Figured and still figure Europe will be bearish but inflation was a worry, however farmers are well positioned to benefit from inflation. I didn't know if aug-march were gonna be the wettest on record or that 2012 would be the cool during pollination. With a high percentage of costs and a substantial portion of your asset base tied up in recently inflated land I would say you I would have been foolish not to sell at price levels that have been hit twice in history. I felt I would lose more balance sheet value if prices decreased so I managed my risk. What if commodity price collapse and you are upside down on your land purchases, your rental contracts, and your new iron. You gonna hope for inflation or the Greeks to bail you out. I was sold a couple years out on futures also but bailed with smaller profits then I should have. I am old enough that I don't need to hit the top or impress a banker but young enough to still be buying and building.
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Veteran Contributor

Re: lo and behold

I am also old enough that I can't figure out how to keep my sentences separated. I hit return but when I post it all runs together
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Veteran Advisor

Re: lo and behold

FWIW, I like to look into what I can lock fertilizer in for, I already have a good idea for seed (last year, plus 5% is what I'm gessing),  fuel, and what I can lock my corn in for.  If I can lock in my fertilizer, seed, and fuel, for 50-60 BPA, I like to sell the 50-60 BPA, and lock in my costs, at the same time.  I would be doing that right now, but my fertilizer dealer doesn't have next year's prices finalized yet.

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