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Be proactive to hit your profitability goals

Markets have been even tougher than normal to figure out in 2020.

As a commodity analyst who also farms, I wear some different hats. I have to believe it makes me better at what I do, both in my business and in my farm. Given the opportunity I get to see the things that handcuff producers and the things they excel at, I’ve tried to become a better marketer for our operation. Yes, I’m admitting I don’t always do as good as I would like to when it comes to marketing my own crops. As I’ve been sitting in a combine seat the last two weeks, I’ve had plenty of time to think about how 2020 has played out. I’d like to share with you some of the lessons we may want to be thinking about as we move forward.

First in a year like 2020, there have been times I haven’t felt too smart. These markets have been even tougher to figure out than normal. Fortunately, for all of us, we received a rally at a time when most of us didn’t expect it. A USDA report in August that most of us called bearish caused a $1.80 rally in soybeans and 60 cent rally in corn…heading into harvest…with rather large carry-out levels projected in that report of 2.756 billion bushels for corn and 610 million bushels for beans. Again…we rallied after that. Is that crazy or what? What can we learn from how this has played out?

Earlier in the marketing year, some were calling for massive carry-out levels to manifest themselves, especially for corn…and I understand for the most part why they were doing so. Given quite bearish rhetoric, our markets plummeted, with board-based corn prices flirting with sub-$3 levels while some surmised beans were going under $8. Some producers were concerned if they didn’t make sales, prices would drift lower and put them in an even worse situation. What we can learn from this is to be cautious about making marketing moves based on fear. If you’ve done your homework, which is a topic we’ll discuss in a moment…you should know what prices work for you. If they don’t work, don’t get pushed into a bad marketing move based on the fear we’re moving lower.

Another lesson we can learn from this character-building year called 2020 is to be cautious in ‘moving the goalposts’ as the markets change. When you know the prices that work for your farm, it helps put together a solid marketing plan. Putting offers in at those levels makes great business sense. The problem in a year when we’re rallying like we have is people tend to pull their offers.

Given how poorly our profitability looked at $3.30 and $8.50 basis CME prices, it pains me to have producers ask if they should go ahead and sell $10 beans. Given a dry August, bean yields for many have hung right in there…so if your yields are a pleasant surprise and you’re handcuffed on whether or not to sell $10 beans, do the math. Taking the bird in the hand when it comes to marketing is rarely something you’ll regret.

All in all, we can talk about mistakes we’ve made and beat ourselves up over them…or we can learn from them. The beauty of this as I write on Sept. 25 is we have some of the better prices of the year still staring us in the face. As we move through harvest, I urge you to plug your actual yields in to know what profit margins look like…then be proactive if you’re able to hit some of your profitability goals.

Reach Matt Bennett at 815-665-0462 or mbennett@agmarket.net
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The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
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