Extra bushels and smart marketing can be the difference between red and black.
Can you believe that we are already in the second week of October? We’ve had some 70 degree days, and we’ve had some temps in the low 30’s, all in the same couple of days. I think the markets are watching the weather patterns too closely and can’t make up their mind! Beans can start the week higher, and by noon they are trading lower again. Corn has been trading range bound and lately we’ve seen it move a little more than $.02-.03 per day. Harvest is progressing across our territory; some areas are getting close to wrapping up bean harvest, and others are just getting a good start. No matter which area you are in, harvest is always a busy time of year. However, like we’ve talked about before, don’t fall asleep marketing your grain even though you are spending long hours in the fields.
Since soybean harvest is the focus right now, I thought it would be a good idea to shine a light on one of the positives on the bean side of things. I’ve been hearing about some pretty tremendous soybean yields this year across our territory. Many thanks go to our favorable growing season and the hard work our producers put into the fields. I’ve heard lots of comments lately like, “well, of course, we need more bushels, the markets stink!” This is a true statement this year, but the added bushels that we are gaining sure can help the bottom line.
So let’s pretend (easy math for me since it’s a Monday) that we planned on raising 60 bu beans on 100 acres and sold 50% prior to harvest. In this case, we had 3,000 bu of beans contracted. Now that we’ve gotten our final yield on that field at 70 bu/acre, we are only approximately 43% sold. The question now becomes, do we need to sell more beans or are we comfortable carrying 57% of our beans unpriced past the end of the year? Does the current market warrant us to sell another 10-20% of our beans so we aren’t carrying too much risk late into the year and even into next year?
Look at it from the cash perspective. If we raise an extra 10 bushels of beans per acre and can sell them for $9.00/bushel. How does an extra $90 change your bottom line? Can you make a profitable sale on an additional 10 bushels per acre turn your bean balance sheet from red to black? What level can you consider a sufficient amount worth locking in? Remember, we can’t guarantee a profit unless we lock it in when we know it’s there.
This week we will get an updated supply and demand balance sheet from the USDA. If the early estimates are correct, we could see another increase in the soybean yield and increase the overall bean supply. How will the markets respond? Even though it will be awhile before we know where the final yields fall nationwide, it won’t be long before we know the final yields for our operation. Plan accordingly and have a plan in place, even though I know you are busy. It will pay off in the long-run.