A Sure-Fire Grain Price-Raiser

A Sure-Fire Grain Price-Raiser

Just avoid taking the highly predictable low.

The smartest, simplest way to raise your 2010 average grain price is avoid selling at harvest. That's when grain and silage buyers hope to get their best buys.

You have a far better chance of avoiding the year's lowest price than catching its highest price, suggests
University of Missouri Extension Market Analyst Melvin Brees
. "Avoiding the market low is a reasonable goal. That should be the first objective in a marketing plan."

Lows are more likely to occur at harvest time than any other time of the year, notes the Food and Agricultural Policy Research Institute economist.  "Waiting to sell grain when it's hauled away from the combine increases likelihood of getting that low price."

Risk-avoidance strategies

Use several marketing tools and marketing times. Here's what he counsels:

For grain to be delivered at harvest time, pre-harvest sales are more likely to net a higher price and avoid a price low. Current Futures market (and forward contract) bids offer prices above the break-even point for most farms. Locking in a price above break-even reduces marketing risks.

If and when prices move higher, be prepared to capture those above-average prices especially for corn or soybeans to be delivered for sale at harvest.

Expect continued price volatility. "Futures prices and cash bids could vary more than $1.60 a bushel this year. Watching price action closely may be critical for making sales decisions."

Corn and soybean markets are bearish now, pointing to higher ending stocks. There are many signs of a bearish downturn in the markets for both corn and soybeans as ending stocks build.

Numerous factors could contribute to more downside price risks. Uncertain economic conditions, reduced livestock feed use, lower energy prices, a stronger dollar and position liquidation by speculators are other factors to watch.

To read Brees' "Decisive Marketing" newsletter, go to the MU FAPRI Web site at
http://fapri.missouri.edu and click on "Farmers' Corner."

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