Double Duty: Marketing Your Old and New Crop
It’s mid-way through the growing season, with harvest around the corner. If you still have some bin bushels to clear out, you face marketing decisions on two crops—old and new.
That’s a lot of risk to manage at one time. While you shouldn’t make pressured decisions, be aware that time may be running out for good marketing before combines roll and grain moves into the market.
In our latest podcast, host Doug Roose, V.P. of Producer Marketing for ADM Grain, talks about the challenges of August grain marketing—especially with tariffs and disrupted planting. Roose’s guest is Paul Scheetz, Commercial Manager of three ADM processing plants in Iowa.
Listen to the full conversation here:
Here are the takeaways from the conversation between Doug and Paul:
Plan early to avoid regret
By mid-July, corn markets were 15 to 20 cents off their high and had settled around $4.30. Farmers who sat on their hands may be wishing for a do-over.
“Farmers may be frustrated where they sit today,” says Scheetz. “If you’d asked those producers back in January if $4.30 or $4.40 futures are something they’d sign up for, I think every single one of them would have been pretty excited about it.”
It’s a lesson: Be ready early in the crop year to recognize and jump on profitable markets.
Get busy in the next 60 days
Uncertain weather and trade create market volatility—which poses opportunity. Mid-July futures were up 50 cents from January lows. But markets typically decline from July into harvest season.
“We’re running out of time,” Scheetz cautions. “If we want to clean out those bins and not carry crop over, we have 60 days to establish price targets. The better-thought-out plan seems to be rewarded in these types of markets.”
To avoid making spot sales that are less profitable, sit down now and develop a plan around your target prices.
Review your timing and logistics
Every week or so, evaluate your price targets, along with your grain quality and storage situation. With a good idea of your logistic and cash flow constraints, you’ll know when you need to market.
“I like to break that timeline into specific points,” says Scheetz. “I set aside an hour every week or 10 days to talk with my advisor or have a conversation with myself about what has changed, whether I need to evaluate my targets, or whether I’m still on course.”
At the same time, don’t over-deliberate. Be decisive if markets cover your cost of production and then some. Don’t hold out for an elusive “high.”
Don’t get overly bullish
Try not to make decisions with blinders on. It’s easy to become overly optimistic when markets are up. Seek out other perspectives—not just information that reinforces your local view.
“The unique thing about this year’s crop is the wide range of crop conditions depending on the state you’re in,” says Scheetz. “That creates local opportunities, but it also leads to a regional bias.”
The next big market mover could be the revised USDA acreage report on August 12. If you hold an opinion, ask, “What if I’m wrong?” and have a plan in case the prices move against you.
Shake off regret
If you didn’t capture the rally, don’t let that paralyze you. Take a lesson from baseball, where a fielder who bobbles a play shakes it off and gets ready for the next pitch.
“Make sure that error doesn’t compound into 2 or 3 errors,” advises Scheetz. “Your psyche is a big part of grain marketing. Move forward with a specific plan. That’s a really big deal.”
With tariffs and late planting, this has been a year for the record books. Forgive yourself for missing rapid changes and move on.
Use a coach
Finally, seek out people you know and trust. Bounce your ideas off a coach, like the 12 ADM merchandisers who work for Sheetz in Des Moines. If you have both old and new crops to sell, we can help with a game plan that keeps you moving forward, no matter what the weather or markets throw at you.
Let’s get after it, before time runs out.
Past performance is not indicative of future results.
ADM is providing this communication for informational purposes, and it is not a solicitation or offer to purchase or sell commodities. The recommendations in this communication do not take into account any particular individual’s or company’s objectives or needs, which should be considered before engaging in any commodity transactions based on these recommendations. The sources for the information and recommendations in this communication are believed to be reliable, but ADM does not warrant or guarantee the accuracy of the information or recommendations. ADM or its affiliates may hold or take positions for their own accounts that are different from the positions recommended in this communication. The information and recommendations in this communication are subject to change without notice.