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cropsey, il 61731 | Sure you want to get the most money for your crop and you can forward contract, protect with options or just use the board. Roach ag tends to use stochastics but these days we can have a sell signal only to have an actual higher price later that doesn't occur during a sell signal. It's really hard to guage the market these days. Also, inputs may have come down some, but margins are still tight right now (depending on seed cost, cash rents, etc). It's hard to fault someone these days for locking in a profitable level and staying in business. Personally I like have enough sales at profitable levels to cover costs before sliding over into the speculator seat.
The guys getting $2/bushel more had either more tolerance for risk (waited to make the sale), used futures/options (ie. spent money) to capture the gain or just got lucky - not to be underestimated as a tool either. Can you reliably state that the markets will be higher next summer? Do you have the money to take a position on the board (options, futures, margin calls)? Do you feel lucky? There is no foolproof way to market so you always sell at the top of the market - plain and simple. Well, I guess you can pay $2/bu to set $5/bu price floor, but that means you are getting $3 - good at the coffee shop, at the bank not so much.
Technically, you should only sell actual grain when the basis is small no matter what the flat price. Then you use either an elevator basis contract or options/futures to set the board price when it's higher. ie. sell corn, buy a call option near the money a few months out and wait for it to gain in value (hopefully it does). However, once again if the price the elevator is offering is profitable, higher than in the past, who cares what the basis is - I really don't care if I pay 20 cents more in basis if I sell for $4 vs selling for $3.30 at a lower basis. I'll take the 70 cents. My bottom line is that we are not in Kansas anymore and traditional cycles and traditional buyers are long gone. Market signals are hard to interpret - selling for a profit and staying in business is simplier for now.
just one point of view,
Pat | |
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When to make grain sales....tools you use?
