Corn and soybeans futures reached two-year highs in recent weeks as part of a broader surge in commodity prices. July 2016 corn futures, for example, climbed to $4.07 and currently are at $3.96. Soybean futures are bouncing between $10.60 and $10.90. Not accounting for basis, this is well ahead USDA’s cash price forecasts of $3.60 for corn and $8.85 for beans for the 2015/16 crop year.
Market rallies in today’s low-price environment are critical windows of opportunity for producers positioned to take advantage of them. While many will speculate on the how long and how high a rally will last, good marketers understand that locking in a profit requires applying some tried-and-true rules to their marketing:
- Know your breakevens. The closer to the penny, the better. Otherwise, you are throwing darts at an unknown target.
- Identify your desired profit per acre or profit per bushel to establish your profit target. This takes away the emotion that often enters marketing decisions.
- Remember that marketing isn’t a one-time decision. By selling your crop in increments -- up to your crop insurance guarantee – you reduce some of the emotion of marketing.
Price changes offer good opportunities to review your farm’s profit potential. Once the crop is in the ground, update costs as well. We offer Manage Profits to help you understand and identify market opportunities. Manage Profits, which is free to customers through AgriPoint®, has all of the basic components to manage risk in production agriculture.
This easy-to-use tool allows you to manage crop and livestock production, track marketing progress, crop insurance, generate profitability reports and stress test the business with what-if scenarios. The what-if analyses involve plugging several variables into an operation's current plan to see how one or multiple changes, including futures prices, affect profitability.
To learn more about Manage Profits, log into or enroll in AgriPoint. Click on Manage Profits. There, you will find an informational video to get you started. Click on “Help” in the upper left hand corner for a user guide with step-by-step instructions. Contact your local FCSAmerica office for further assistance.