As farmers begin and plan for 2021 crop marketing, how did 2020 affect the possibilities for 2021? The price strength seen since fall has been largely a 2020 crop event, although 2021 corn and soybean opportunities have been improved dramatically. Already this year, new crop prices have offered gross revenues $135 to $175 per acre above ISU’s estimated soybean and corn costs respectively!
Once the farm’s pricing objectives are met, it is time to make sure the marketing tool selected fits the circumstances. Is basis at your goal? Do you want a price floor or a set price? All these choices can be difficult to decide in the emotion of a moving market.
The adage “don’t put all your eggs in one basket” can be applied to crop marketing. It can be easier and more comfortable to use marketing tools that are familiar and well-understood. But one tool shouldn’t be used for all marketing conditions.
One way to select the tool for the situation is to use the tool appropriate for the risk management desired. The Crop Marketing Matrix (above) helps to make the tool choice. When choosing a tool, consider the risk that needs management (price and basis) and implement the tools that fit the need.
To look at how the matrix might be used and thoughts on new crop marketing, this brief recording is available: https://tinyurl.com/revtools
To learn using real new crop corn and soybean prices, consider participating in the virtual 2021 New Crop Iowa Commodity Challenge simulation. Please click here for more information and how to begin the learning.