We are headed into a three-day weekend, and this is the driest year in over 50% of the corn country. It is now going on three weeks where the 10-18 day models call for abundant rain. And every day it gets deferred, and the short-term dryness gets worse. Finally, traders realized that we are in fact cutting yield and markets have rallied substantially.

Honestly, the weather people are trying really hard to give us good information. The traders are all trying their best to be right about the market when in reality – they just have to be right about the weather.

But most of you reading this are different from them. You’re producers. You are always in the markets. If they go up, you’re usually stressed that you sold too much and if it is going down, you’re stressed you don’t have enough sold.

Can you make a profit?

But here is your reality. Estimate your yields, and be conservative. Multiply that by price for fall and see if selling here makes you money. We have a pretty elaborate program that does this and blends in all your sales so you know exactly where you stand no matter what yield you test. But if you are profitable, then selling is wise and you have nothing to stress about.

Don’t want to miss out? Great, we feel the same way about most of the clients we consult with. As you figure this out, add in the cost of a call, which will gain in value if the market keeps moving higher. Now if the market keeps going up, you can always sell that critter and add the money you get back to the bushels you sold for fall.

This is called a Flex Position. This gives you an operating profit from today’s price less the cost of the option. And if it does keep going higher, you can make even more profit. Now you don’t need to be stressing whichever way it goes. And you can enjoy your 3-day weekend. Boating, fishing, camping, working, spending time at the in-laws – whatever makes you happy.   

I know this is like trying to communicate a one-day risk management seminar in 3 paragraphs. But I am sure some of you get it, some of you already did it, and some of you want to call and get educated on what the heck I am talking about. That is fine, and you can call anytime you want.

Reach Bill Biedermann at 815-893-7443 or [email protected].

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