Know your basis
Basis levels for both corn and soybeans can vary by 50¢ per bushel throughout the year. They typically narrow as the supply pipeline shrinks and widen when supplies increase. A $4.50 corn futures price and a 50¢-under basis is weak compared to $4.50 futures and 15¢-under or better.
“Our (Iowa) regional farmers had strong basis levels along with the weak futures prices (in November),” Hart says. “So we encouraged them to consider forward pricing their basis and leaving the futures price open.”
Growers should lock in a favorable basis when it appears, Alexander says.
With the lower prices, it’s likely that Revenue Protection insurance will see floor prices below the $5.65 for corn and $12.87 for soybeans seen for 2013. Prices are based on the year’s November soybean and December corn futures prices on March 15.
“Again, be more aggressive in marketing at a price that offers a good margin,” Hart says. “You can’t afford to be picky. Prices won’t be as hot.”