In the quest for profitable production, corn prices continue to sag dangerously close to breakeven numbers. The latest data from USDA pegs season-average prices around $3.60 per bushel.
Farmers prepare to dig their heels in for 2019, which will likely be the sixth-consecutive year of relatively low commodity prices following the drought-induced boom of 2012-13, and search for fresh ways to scrape and scratch for every possible penny to stay in the black.
What production and marketing strategies will make the most sense — and cents — this coming season?
Hedge your bets
Cody Heller, CEO of Central Wisconsin Ag Services who also farms 3,500 acres of row crops, says of his 100 or so clients, only about four of them hedge, despite the potential upside of doing so.
“We bleed equity, and we’re borderline breakeven at $3.30 or $3.40 cash in corn,” Heller says. “Hedging can help keep you above breakeven, but a lot of people don’t understand it or are afraid of it. It’s a huge problem in our industry.”
In 2018 Heller used a series of calls and puts to sell his corn at an average of $4.20 per bushel. Does he wish prices would have been even higher? Absolutely. But selling corn for $3 per bushel could sink an operation; his current marketing strategy protects profits and allows him to keep rolling into the next season.