Matt Bennett on Grain Marketing: Keep Your Head

When markets are bordering your break-even, it’s encouraging to hear from producers who are making it work. One straight-shooter on the speaking circuit is Matt Bennett. He grows corn and soybeans on a 3,000-acre farm in Illinois.

For Bennett, it all comes down to staying focused and preparing for unforeseen opportunities. “We’re all under stress right now,” he says. “It’s no secret that our working capital has diminished, and our cash has declined. Yes, 2019 is challenging, but there will be opportunities. We just have to be ready.”

A key part of Bennett’s strategy is forward marketing. He made money on soybeans last year by jumping on a spring rally and putting price protection under the rest of his bushels. To pick his brain on plans for this year, we caught up with him at the Farm Futures Business Summit in Coralville, Iowa. Hear Bennett on Episode 12 of our podcast, In the Driver’s Seat: Keep Your Head During Challenging Markets.

Some of Bennett’s top tips are:

Know your numbers: “In the elevator business, we noticed our more successful customers knew their average yields and what those yields looked like with current costs of production. When guys ask, ‘What numbers do I need for my break-even?’ I say it just depends on how good you want your number to be. Do you want it to be a dart board, or something you can count on, so if you market 25 cents over it, you’ll have 25 cents of disposable income?”

Harness your emotions:  “Last spring I had farmers tell me, ‘I’d give anything to sell $4 corn and $10 beans.’ They didn’t have to wait long because we had a spring rally, but many farmers sat on their hands, thinking a weather rally in the summer would really put them in fantastic shape. They missed the rally they’d begged for, fearing they’d sell too cheap. Proactive marketers look at their break-evens. It’s served them well the last several years.”

Understand marketing tools:
“A lot of guys tell me, ‘I don’t want to get into futures and options,’ and I understand, it’s not for everyone. If they’re not used appropriately, they can sure get into a guy’s pocketbook. But as we try to get better, we’ve got to be open to new ways of doing business. Futures and options, if used appropriately, are risk management tools.”

Example: “Last December, I sold 15% of my 2019 corn at $4.06. If we get to $4.18, my plan is to be more aggressive, probably with 35% to 40% of production. If we get a bullish set-up, we’ll re-own most of our bushels—meaning I’ll buy a call above the market that will cost 10-cents or so. Because if we do end up getting to 50-60 cents higher than the current range, I don’t want to be sitting on the sidelines on bushels I sold ahead of time.”