What is in this article?:
- Stop Waiting for the Highs
- WHAT ABOUT 2010?
WHAT ABOUT 2010?
Ed Usset, University of Minnesota grain marketing specialist, says growers who have their land bought or rental agreements in hand and have a good sense of fertilizer costs should start looking at some 2010 marketing opportunities.
“There is a heck of a marketing opportunity out there; there's no way around it,” he says. “It's not like what we saw last year (2008), but it's enough to convince me to get started.”
Every summer, Usset regularly sets a marketing plan for the following year's crops. It mirrors his attitude toward taking advantage of good prices when you can through scale-up sales when possible.
His 2010 marketing plan was originally set in June. He carries a philosophy of buying crop insurance, then using scale-up sales to lock in potential profits. “It's based on margin management,” he says. “I posted the 2010 plans (corn and soybeans) because I'm looking at costs of production.
“I get a sense for the cost of production for average farms. I looked at pricing opportunities for 2010 relative to projected costs,” he says. “The fact is, a lot of producers can lock down fertilizer costs for 2010 that are close to where they were two years ago.”
Usset starts by buying crop insurance to protect his production risk. Then he works to have 75% of his anticipated crop (based on APH) priced by early June.
Here's his original 2010 preharvest plan for corn, based on a projected production of 90,000 bu. from 600 acres yielding 150 bu./acre:
The plan starts on Jan. 1 with the pricing 10,000 bu. at $3.65 cash price ($4.05 December futures) using forward contract/futures hedge/futures fixed contract.
- Price 10,000 bu. at $3.90 cash/$4.30 futures by March 29, pricing tool to be determined (tbd).
- Price 10,000 bu. at $4.15 cash/$4.55 futures by April 14, pricing tool tbd.
- Price 5,000 bu. at $4.40 cash/$4.80 futures by April 28, pricing tool tbd.
- Price 10,000 bu. at $4.65 cash/$5.15 futures by May 13, pricing tool tbd.
- Price 10,000 bu. at $4.90cash/$5.30 futures by May 27, pricing tool tbd.
- Price the last 10,000 bu. at $5.15 cash/$5.55 futures by June 10, pricing tool tbd.
- Exit all options positions by mid-September 2010.
For more on Usset's marketing plans, go to http://www.cffm.umn.edu/GrainMarketing/MarketingPlans.aspx.