Managing Corn Price Risk

For all the potential hedgers/sellers out there that are waiting for a neon sign to show up in your yard to make sales, ask yourself if that ever occurred for wheat or soybeans. In both those cases, once the market started to break it still never became a “comfortable” or popular selling opportunity. The public is heavily long this market and the producer should not underestimate downside potential. Due to the dramatic shift in profit potential to favor corn over soybeans during the past month, don’t kid yourself that we are up here on acreage concerns—we are at current prices due to inflated risk premium associated with weather concerns and the speculative enthusiasm that goes with it. While there was a laundry list why producers shouldn’t sell soybeans a few weeks ago, honestly ask yourself how many of those excuses look legitimate after your revenue per acre declined nearly $200 per acre. At $6 futures, just how many dollars per acre of revenue do you think you could see evaporate if such a strange thing as getting the crop planted actually somehow happens again this year??? We are 90 cents higher than where we were just 8 trading sessions ago. Which by the way, was a price level achieved after a 75-cent break that nobody was expecting. Just because your cash grain buyer will no longer offer you your desired cash marketing tool is not a legitimate excuse for passing on current prices. Put your business hat on, quickly establish a plan, warn your banker and contact your broker!
Duane