The market has moved to a different level with the happenings of the past few months. If you developed your marketing plan at the end of 2019 for 2020, you likely need to re-visit your plan to ensure your market targets are still attainable and realistic.

USDA released updated numbers last week. Some changes were noted with an increase in old crop corn stocks due to ethanol use being adjusted lower, more than offsetting a lower production number from 2019.

USDA made no changes to the 2020 crop, with the exception of the stocks adjustment, due to the change in usage for old crop. Given the current corn crop condition scores and acres planted, the stocks-to-use ratio is expected to continue to grow into 2021 if this year’s crop develops without any trouble.

Rethink sales targets

With that in mind, it’s time to review your previously established targets for sales. As early as it is in the growing season, it is imperative to manage sales and give an opportunity for upside in case of unexpected changes that would encourage a market rally. Calls are very reasonable property to continue that upside if you do indeed make sales in this environment.

Looking at USDA soybean expectations from last Thursday report, with a reduction in exports on old crop beans, USDA pegs ending stocks higher, thus moving stocks-to-use to 16.3% for the current year. New crop beans are being shown currently with an expected 4.125 billion bushel crop. Crush use was increased giving a reduction in ending stocks and expecting stocks-to-use to drop to 9.1%, down from last month expected 9.4%.

Related:How to write a pre-harvest marketing plan

Soybean rally

Beans have had a price rally from the April 21 contract lows -- it may be enticing to price cash beans in some areas for both old crop and new crop.

Bean basis levels remain firm in many areas making a cash sale attractive to reward the market. As with corn, it is important to leave some upside open on beans; using a November bean call will provide upside availability until the end of October.

With USDA numbers in hand, you may give thought to not only your 2020 marketing plan check-up, but also start looking at your 2021 marketing plan as well. When marketing this far in advance, it is very important to maintain flexibility in your marketing plan.

The carry in the corn market is giving some incentive to get started on Dec 2021 marketing. With the relatively low volatility present in corn options, consider starting your 2021 marketing plan with put options to give downside protection out to November 2021.

Related:5 keys to a successful long-term marketing plan

Dec 2021 corn is trading near the 3.75 area. At the time of this writing you could purchase 3.70 puts for around 26c cost. This would provide a floor with no commitment to the price if it is higher or delivery in the instance of having production issues next year.

A flexible plan for 2021

Again, maintaining flexibility is very important, but with the changing environment in the livestock and ethanol sectors and the impact on corn usage, consider a start to the 2021 marketing plan.

If you are not familiar with using options in your marketing plan, this is a good time to study up on the marketing tools that will bring you flexibility, allowing you to be more comfortable with the marketing decisions you make. The next big report will be the quarterly grain stocks and planted area to be released June 30, 2020.

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