Channel Grain Marketing Consultant
As farmers collect and analyze 2019 yield data they have the ability to determine a solid breakeven price for the new crop. This information helps to make decisions about selling a few more bushels versus storing grain, especially in situations where cash is needed.
One great way to gain more pro t from this crop is to store grain at home. As I write this column in September, the carry from December to July 2020 corn is running close to 30 cents and November to July 2020 in the 50-cent range. The market is trying to tell producers it will pay to store those bushels at home. While no one knows the direction of the market, one dynamic stays consistent: we typically see basis improve from harvest up until summer months.
To capture this carry, a producer may consider selling July corn or soybeans, locking in price levels significantly above what they currently see. Having that price locked in might cause a margin call if the markets rally. However, as basis improves, the producer is able to see the value of their corn increase regardless of what the futures market is doing.
This strategy is quite similar to what most elevators use to maximize return on their storage. I believe those of us who store at home should treat our bins the same way. Any extra money we can generate by managing our bin space most appropriately is money that could be the difference between making money and not breaking even.
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