February Grain Market Update


By Tom Guinan, producer marketing

Here we are half way through the month of February. Since the beginning of January, both corn and soybean prices have fallen hard. If you are like many of our customers, you are probably feeling a little less than thrilled with the prospects of significantly better prices returning anytime soon. You probably also feel like there is a rally coming in Chicago once we get into Spring. If you are also wanting to get some loads pulled out of your bins before the roads thaw out, we may have a good solution for you. 

Since basis has been improving, especially for corn, with an abnormally strong basis, we think this is a great time to use our Extended Price contract. This contract allows you to move your grain, AND keep the futures portion open. So, if that rally does indeed happen while you are busy in the fields, you don’t have to stop everything in order to haul grain to town. You will need to make another decision at a later date, in order to fully price your grain. Another good benefit of this contract is that we will advance you up to 70% of the cash value of the grain when you enter into the contract. 

We generally talk about this contract during Harvest as a way to avoid commercial storage, but it also works well in times when the basis is relatively strong. We’d encourage you to talk with your local GMA to learn all of the pros and cons of this contract. Then, get signed up and start hauling. 

One other thing to mention is that we’re getting close to the deadline for signing up for the New Crop Averaging Contracts. That paperwork must be signed by Feb. 28th.