Watch for Signals in the Grain Market

Coming off a successful harvest and an extended market rally makes even the most experienced farmers like Bernie Spindler think twice about their own grain marketing plan. Spindler, an ADM territory manager and family farmer, is featured in episode 41 of In the Driver’s Seat. It’s his job to stay on top of production and market trends, and of course, it’s personal too.

Stepping back, the 2020 production across North America wasn’t quite as strong as expected by the U.S. Department of Agriculture (USDA). Even so, China’s demand for soybeans and corn helped push U.S. prices to a multi-year high despite the country falling short of its purchasing commitment. Now with early weather concerns in South America, the ongoing demand for U.S. crops is poised to continue leaving many to wonder if the market will keep climbing the hill.

In this podcast, Spindler pulls from his history and offers fellow producers a look into his own grain marketing experience and decision-making process. He leverages different tools such as grain contracts and crop insurance to protect the floor of his plan and to provide upside for his operation.

“For my own farm, there’s a certain percentage of my next year’s expected production that I want to have at different levels. For me, it’s 25-30% at this time of the year, and then beyond that, I want to try to lock in a floor on another 10-20%, so my crop is half sold and I have a decent floor in this strong market.”

Using this approach, Spindler’s goal is to beat the February price average, leaning on the floor that’s protected by his insurance. He knows crop insurance works hand-in-hand with any robust marketing plan. In general, he likes to set a floor for 80% of his crop, which comes to 140-150 bushels of corn per acre. Another consideration is how much revenue protection to include in his plan.

Along with planning, Spindler closely watches the market and isn’t afraid to take calculated action when the time is right. As a part of his job, he is a member of ADM’s Market Signals Team, which is a diverse group of ADM employees and independent professionals from across the country who are knowledgeable and passionate about grain marketing. Utilizing their collective insights, the team publishes a weekly look at market updates and trends to help busy farmers stay up on what’s happening from the exchange floor in Chicago to the docks of Shanghai to the soybean fields in Brazil.

Spindler says, “If you wait too long for higher prices, good opportunities will slip away.” He’s been encouraging other farmers to start locking in 10% or 20% of their crop at current prices to build their marketing plan and protect more of that potential profit. He feels it’s a good time to keep selling into the market and not lose track of the high corn and bean prices.

“On beans, we’ve seen ceilings up to $12.50-$13.50, but if there’s a healthy $11-type of floor, I’m okay with giving up anything above $12.50. I don’t want to hit a home run on all my sales because I don’t want to pay for that home run at this point in time,” says Spindler.

Furthermore he notes, if you’re in a scenario where you don’t know what to do, let the calendar work for you — sell a little bit every month. You have your crop insurance working for you and if you end up with a good yield next fall but not much price, you may regret giving up a whole year’s worth of pricing.

Spindler takes ownership of his grain marketing efforts by leaning on three legs of the stool – understanding the full financial picture of his own farm operation, planning for the known and unknown through contracts and insurance protection, and actively watching the market to make proactive moves to sell and meet set price targets throughout the year. It’s not a one-size fits all plan, but it’s rooted in a rational, common sense methodology that’s been a successful formula for Spindler for decades.