Crop Growing Risk VS Per acre Profit Potential
When profit margins are high it makes more sense to be aggressively sold than in previous years. In normal years, many farmers don’t like to be above 20% during the growing season. When the profit margins are 2x of previous years it might be a good idea to lock in 30-40% of potential production.
Potential New Crop Price
Looking forward, what is a realistic price for new crop? What factors will cause the market to move higher or lower?
Weather Market Potential
Every year the crop is killed at least once; 2021 will be no different. However, because the world situation is wild, the market has potential to rally a lot. This is an excellent opportunity to grab some high prices if a weather market materializes. Historic prices can give an indication on how high the market might rally.
Contract Types: Basis/ Futures
In this environment there can be some excellent opportunities to do either a basis or a futures only contract as the market is extremely volatile. These opportunities maybe short lived and it is crucial that the right contract is used for the situation. Make sure you give Greg a call before you do any of these contracts.
Grade Risk Disaster zone – Elevator feed price VS feed Market
Downgraded grain can be a disaster. Everyone knows it’s super easy to lose $2/bu on grade risk alone. Before contracting any grain at the elevator have a good idea what the fall feed market price is . Remember the falling number saga of 2019.
Call to action
Figure out what your comfort level is when it comes to pre pricing grain and at what price. For example, if wheat goes to $25/bu then book 100%, but if the price is only 8, then maybe only book 5%.
Unless the price is simply too good to be true, then always use targets.