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Pricing grain below production costs in spring 2024

Will the spring price bump be enough to allow you to price grain above production costs?

Ed Usset, Marketing specialist

April 19, 2024

3 Min Read
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In my January column, I presented 2024 pre-harvest marketing plans for corn and soybeans. When writing these plans, I noted that the selection of a minimum price objective was the most important piece of a pre-harvest marketing plan. The minimum price was the price under which I would not price grain before harvest. Set this price too high and you will get nothing priced. Set it too low and you are too early and too cheap. I set 2024 minimum price objectives that reflect break-even production costs in southern Minnesota and northern Iowa - $5.05 cash/$5.45 Dec’24 futures in corn and $12.40 cash/$12.90 Nov’24 futures in soybeans.

New crop corn and soybean prices have enjoyed a modest rally since late February, but they remain well below my minimums of $5.45 Dec’24 corn futures and $12.90 Nov’24 soybean futures. My minimum price objectives are starting to look high, and I risk getting nothing priced before harvest. This was also true in January but no worries, it was January and I had time to wait for better pricing opportunities. Now it’s April and I need to address the problem, and I will start by asking a question.

Does it ever make sense to price new crop grain if you know that the current pricing opportunity is something less than your production costs? Yes, it does and let me discuss three good reasons to price grain before harvest, even if the price seems low relative to costs.

  1. You are one of those not-so-common producers who has no storage capacity on their farm. With no place to store your crop at harvest, you have no “Plan B” should you find yourself looking at an unsatisfactory harvest price. I happen to think that producers without on-farm storage tend to be the best pre-harvest marketers. They do not have the luxury of thinking, “If the harvest price is bad, I’ll just put it in the bin.” They pay closer attention to early pricing opportunities because their only alternative is the harvest price.

  2. I am aware of some grain handling facilities that will not unload your grain at harvest if it was not priced for harvest delivery. Does this sound unfair? Grain elevators have limited space and they must place a priority on taking in grain that was priced for harvest delivery. It is worth a few phone calls to understand the policies of your local markets at harvest. 

  3. In any business the goal is to maximize profits. But grain markets can be cruel and there are times when your only option is to minimize losses. Pricing grain at a level 30 cents below production costs only makes sense if there is a chance that the harvest price will be 80 cents less than costs. Sometimes you maximize profits but sometimes the best you can do is minimize losses.

Spring is here and with it, I hope, is another bump in prices. Will that bump be enough to allow you to price grain above production costs? My preference is to price something this spring, about 20-40% of expected production, even with prices less than costs. And once it’s done, I will hope that my first sales are my worst sales for the year.

This is my early pricing preference, even though I don’t know how to incorporate it into my written plan. What is your preference?

About the Author(s)

Ed Usset

Marketing specialist, University of Minnesota Center for Farm Financial Management

Ed Usset is a marketing specialist at the University of Minnesota Center for Farm Financial Management. he authored "Grain Marketing is Simple (It's Just Not Easy)"; helped develop "Winning the Game" grain marketing workshops; and leads Commodity Challenge, an online trading game. He also blogs about grain marketing at Ed's World

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