By Tom Guinan, grain team
The grain team recently wrapped up the pricing window for the "averaging contract;” we’ve been offering it for several years. Our previous experience shows this contract turns out to be better than the price during harvest in eight out of ten years. This year will follow that same trend.
For corn, the average is $4.0442 using December futures, after a 4 cent fee deduction. We also deduct basis to arrive at the cash price. As of this Sept. 8th, that is about 45 cents above the current market. We commonly hear "I wish I had enrolled more bushels in the averaging contract."
For soybeans, the average is $8.88 versus November futures, after the 4 cent fee. Again, basis will need to be deducted from that to arrive at a cash price. As of this writing, that is about 25 cents above the current market.
I’ll admit. This article is a bit of tease because it is too late to enroll more bushels into this program for 2019. However, we will begin signing people up for the 2020 program in January.
Mark your calendars now and enroll 5 or 10% of your expected production, and then continue to use other sales throughout the year to price those bushels that typically need to come to town during harvest. This contract requires a minimum (and increments) of 5,000 bushels for corn and 2,500 for soybeans.
If you want to enroll bushels, or if you'd just like to learn more, please contact your local Grain Marketing Advisor (GMA).
Feel like you haven't priced enough before harvest?
For those that feel they have not priced enough before harvest, here are the marketing alternatives that we are highlighting for use during Harvest:
A) Extended Price with a High Risk/Reward Profile
B) Minimum Price with a Medium Risk/Reward Profile
C) Min/Max Price with a Low Risk/Reward Profile
All of these revolve around three simple principles: Avoiding storage; Generating Cash Flow: Keeping you in the market for potential rallies.
Since these are somewhat more complicated than our simple Averaging Contract, we encourage you to spend some time with your local GMA before you climb in the combine to understand the pros and cons of these alternatives.