A guy I know, who buys a lot of corn, stated a couple of weeks ago that the last three years have turned good disciplined marketers into bad marketers. He's right in the sense that in the last three years any forward sale has been a bad one. I agree with him that selling grain should be about risk control and not about dollar maximization. Those that can make the jump are better marketers and sleep better. The business school people would say which do you want... two identical streams of cash in total over 10 years, one bounces around and may be negative mulitple years or one that is steady over time? Our first year of farming was 2009 and the sales we made in 2008 saved are bacon and gave us the critical cash to survive the first year.
That being said here is what we have done for 2013:
% of expected yield
Sold 50% of beans 13.21 SX13, Part of this happen because a contract is 5000 bushels and Im such a small farmer. It took a bad crop in South America and the US last year to push bean to $17.50/bu. We have already established a very large crop down south. I think it will be hard to reach the $17 arena again without a US crop failure
Sold 30% of corn
sold 5,000 $6.25 CZ13
sold 10,000 $5.70 CZ13
sold 10,000 $5.70 CZ13 puts for 52 cents
I struggled to sell $5.70 board corn after average $8 + last year on what little I had to sell. Doing nothing is a classic mistake. I sold the puts agains the hedges to get me off my duff.
I always do a payout spread sheet when I do this. If someone want to look at it email me. The high points below:
Futures at harvest
$5.70 I collect the 52 cents and have a sale $6.12. If it goes above Im capped out at that respectable $6.12
$5.18 Im glad I sold the 5.70 and didnt sit still but im riding it down 1-1below $5.18