Old fashioned marketing
Jim Klever and his son Ryan, grow corn, soybeans and wheat on just under 4,000 acres outside Lena, IL. He calls himself “a little old-fashioned” when it comes to marketing and normally doesn’t make out-of-year sales unless there’s a major rally.
“I don’t make a huge amount of sales ahead of time,” says Klever. “I’m usually against selling too much that I don’t have. Sometimes I’ll sell just after the first of the year if prices are good.”
Even after the October crop report showed fewer corn and soybeans and generated bullish prices, he held off on 2011 sales.
“USDA changed its projection for corn prices to well over $5/bu. I don’t think we’re at that point,” he says. However, he has about 10% of his 2010 corn sold via an average price “equalizer program pool” on sales from February through July through Consolidated Grain & Barge at a $4.07 futures average.
“We placed corn in the pool, designed to obtain a stronger prices through more volume,” says Klever. “Some of it was sold at $4-plus/bu. based on the March 2011 futures contract; more of it is priced off the July 2011 contract. That’s for June delivery corn sold at over $5 on the futures. Overall we averaged about $4.50 futures and will set the basis when it is delivered.”
He doesn’t use many futures or options contracts unless he sees a chance to manage risk more efficiently. “We had some puts on corn early in the year,” he says, “at $4.20 on the December contract and a little higher for March (2011). We wanted some downside protection for what our crop insurance wouldn’t cover. We got out of the contracts after the September rally.”
The Klevers have on-farm storage capacity above 500,000 bu. to spread deliveries into spring and early summer. “I had some old (2009) corn left and sold at $4.25 in September,” he says.
As for soybeans, he’s in no hurry for 2010, much less 2011. “We had only 10% sold up to and during most of harvest,” says Klever. “I like the demand situation for beans. When we get to $11/bu. cash, I’ll sell some more.”
Late November 2010