Ed Usset is excited for his old buddy “Hank Holder” this year.
He doesn’t necessarily like Hank’s typical grain marketing strategy of holding grain until the very end of the crop year, then moving it to make room for the next crop. But this year, it could work.
“This year, Hank is a big winner. Anyone holding last year’s old crop and you’re moving it now, you’re having a good year,” he said during a panel discussion on grain marketing at Farm Progress Show.
Corn and soybean markets have been on a good run as of late but knowing when to pull the trigger on selling grain is key. Jim McCormick, chief operating officer of AgMarket.net, said it’s crucial for farmers to know their breakeven numbers, then market for profit.
“You need to know where it’s at. If you ran your numbers in the spring, now you need to rerun them again as you go into fall as you get actual yields so you know where your profitability is,” he said. “You don’t want to market your grain when you have to; you want to market when you have the opportunity to lock in profits.”
What’s driving prices?
The annual Pro Farmer Tour last month, which pegged crop yields and production well below USDA estimates, roiled grain markets.
McCormick said that, along with fears of a “Super” El Niño wreaking havoc on South American crops this winter, have driven speculator money into commodities.
“The best estimate right now, folks: The funds have never been longer, corn and beans, in your lifetime. So the spec money is loving agriculture right now, and that is added to a lot of excitement in the market, but it's going to bring a lot of volatility, potentially, into the fall,” he said.
There’s even been talk of $6 or $7 corn. But Bruce Blythe, senior editor at Farm Futures, is skeptical, simply because there will still be very large corn and soybean crops coming off — the second-largest corn and largest soybean crops in history.
“It could happen,” he said. “But there is a lot of corn out there, so I’m skeptical of that. The fundamentals need to justify those high prices, and he’s not sure they will at this point.”
Where will markets go?
McCormick said farmers should keep a close eye on a few upcoming reports and events.
The first is USDA’s Sept. 11 crop report to see if the agency will lower its corn yield number. Soon, several firms, including StoneX, will be releasing their own private crop estimates. Then, there is the upcoming meeting between President Donald Trump and Chinese President Xi Jinping, which could drive soybean markets in either direction. Finally, on Sept. 30, USDA will release its quarterly grains report.
With only 20% of the current crop having been marketed thus far, McCormick said there is plenty of room for a potential price correction.
“That means that there’s a lot of bushels that are going to have to come to market, and when it comes to market, that will be hedge pressure, and that will be going against that fund long position,” he said.
What should you do?
McCormick said the key is to take the long view on marketing.
He shared a story about a farmer, who produces 400,000 bushels of corn, that called him 20 years ago and told him on a random Monday morning to hedge off 400,000 bushels. The farmer thought the top of the market was in, and he was right.
“It was the most impressive thing I had ever seen,” McCormick said. “The problem was it killed him the next five years. Because his ego was, ‘I can call the top, and you can’t.’ Marketing is the most humble thing you can do. Marketing grain is instantaneous gratification or sorrow because you sell corn at $5.50, and by the close, you’re at $5.60, and you’re like, ‘I can’t believe I sold corn.’ But on the other hand, you sell corn at $5.50 and goes to $5.40, and you’re asking, ‘Why didn’t I sell more.’
“Know your breakevens, build a marketing plan and try to stick with it, and you’ll be in it for the long haul.”
Usset, grain marketing analyst at University of Minnesota, recommends marketing insured acres first, if the price and a good breakeven are there. That might sound aggressive, he said, but something that could be worthwhile to look at. One thing he doesn’t recommend is just marketing for the highest of highs.
“Your goal is a good average price,” he said. “That should be your goal.”
From Blythe’s perspective, knowledge is power. He said farmers should follow the news, limit social media time and take the emotions out of marketing.
“Just be aware of what’s going on — not just here at home, but what’s going on in the Black Sea, the Middle East, in Europe, everywhere else,” he said.