Grain Market Viewpoint

Should You Sell Corn Before the USDA Report Thursday?

I had a few producers call in and ask my thoughts about selling $8 corn. The basis has actually moved high enough in some areas producers say they are being offered close to $8.30/bu. As I told each of them on the phone this morning, anytime you can book sales above $8, I think you should be taking advantage of the situation. I actually have one client, who with these sales, will have ended up averaging over $8/bu. this year on his crop...unbelievable! 

There where also some questions about re-owning after making these sales. I just don't see any reason at this juncture, especially with such good cash sales being booked. My fear is the board itself doesn't have tremendous upside potential (the "risk-to-reward" just isn't that exciting). In my opinion it is more the basis in select areas that could see this biggest jump. For producers who are still waiting on the basis to improve you may want to consider making sales on the board or booking HTA type contracts with your local elevator to lock in flat price then you can simply play the basis. I would not sell the cash and re-own the board. If you move the cash bushels call it a day and bank all of the profits. No need to jump back in at this level and risk the premium.

I also want to make sure those of you holding old-crop bushels understand the window of opportunity is narrowing for banking these types of profits. Remember: The markets are always the strongest when the most fear is in the air. Right now end-users are worried they might not have enough supply. What happens when some type of solution to this problem becomes more of a reality, i.e. more corn coming down from Canada, more coming from Brazil, Argentina, etc.? What happens when the place you normally sell your corn starts railing in more bushels and has to pass along the expense by reducing the basis they are offering you? Be smart, don't be greedy!

 

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on Jan 29, 2014

Every Man Alive should take advantage of the situation if the price of corn rises over $8/bu. My uncle was lucky to find a customer that is very interested about his crop and is willing to pay good money, hopefully he will be so lucky the next year.

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Kevin Van Trump

Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20...
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