Most of the grain marketing information out there has this Utopian view of the process. It’s not real world. This one is perhaps too real world. Read on!
My Corn Marketing Strategy
The first thing I always did was listen to the radio market reports. Then I would check the DTN report. They were always extreme opposites. So I checked the market newsletter I subscribed to. It took a position exactly in the middle. They wanted me to buy and sell several contracts so I’d be covered both ways. . .sort of a lose, lose situation. Anyway, by late morning I was always confused and usually decided to fall back on my emergency plan. . .I did nothing. Many of you are familiar with this plan, but I’m going to lay out all the details for you here, just in case.
April (before planting): Corn is at $2.00 a bushel and way too cheap to sell.
May (after planting): Corn is at $2.50. This is still too cheap, but I’m thinking.
September (pre-harvest): Corn is at $3.00 a bushel. This is a really good price, but corn seems to be on the way up. Common sense tells me to ride out the upswing.
November (post harvest): Corn is at $3.50 a bushel. Great price! See what I mean about an upswing. It’s not finished yet, so I’d be an idiot to sell out now.
December (bill paying time): Corn has stabilized at $3.50 a bushel. A lot of bills coming due, so some people have to sell corn. I have won the argument with my banker and I’m keeping the corn. My idiot neighbor, on the other hand, sold half of his crop! Can you believe that?! In an up market!
January: Corn jumps to $5.00 a bushel! Neighbor is avoiding me. Banker is begging me to sell, But I know a hot run when I see one.
February: Corn goes to $6.00 a bushel. Nobody is going to take advantage of me. My near term target is $7.00.
March: Corn goes to $7.00 a bushel. All of the experts are calling for $10.00 corn. I’ve got storage costs and the wife is talking about Hawaii, so I’m waiting it out.
April (pre-plant): Corn drops to $5.00. All experts still see $10.00 corn by summer. I’m going to wait, both on last year’s corn and this coming year’s. Should cash in both ways.
May (post plant): Corn drops to $3.50. Another correction. Maybe we won’t see $10.00 corn, but I can do pretty good at $5.00. Idiot neighbor sells the rest of his old crop, and contracts ½ of his new crop. What a stooge!
June: Corn drops to $3.00. This thing is going the wrong way, but most of the experts still think it will rebound to $4.00. I’ve waited this long, I hate to sell out for $3.00.
July: Corn drops to $2.50. Not good, not good. This is only break even. I almost have to wait for a seasonal upswing, or maybe a drought scare.
August: Corn is at $2.00 a bushel. I know that’s terrible, but the banker, seed corn dealer, fertilizer dealer, and the elevator all need paid. I’m going to have to dump all of it for $2.00 a bushel.
September: Idiot neighbor drives in with his new four wheel drive pickup. Maybe I can sell him some tickets to Hawaii.
October: I sell my new crop for $2.00 a bushel, happy to get that before it goes to $1.50.
November: Corn jumps to $3.50.