Minding Ag's Business
Marcia Zarley Taylor DTN Executive Editor

Wednesday 11/07/12

Delayed Sales Paid in 2012

HADDONFIELD, N.J. (DTN) -- Textbook marketers warn against storing too much old-crop grain to price during summer rallies, but a handful of gamblers won their bets in 2012's weather market. A study of 100 corn farmers by the financial consulting firm AgriSolutions found operators did a much better job of capturing season-average summer highs than they did in 2008. On the other hand, few earned bragging rights to selling $8 cash corn at the 2012 market peak.

Few growers priced corn above $8 between May and August this year, and most of the sales made during this time frame were in small increments. However, gamblers achieved prices closer to the top in 2012 than they did in 2008, an AgriSolutions study found.

AgriSolutions financial consultant Sam Bachman examined actual sales records for 100 clients for calendar 2012 and found the group averaged $6.40 for old-crop corn sold between January and August. In 2008, the group averaged $3.52 during that same time period. Bachman also narrowed the lens further, by studying sales results in the May through August period when drought panicked grain markets. (See chart in online editions.)

"For all the talk of $8 corn in 2012, very few achieved it," Bachman added. Only four growers out of 100 topped $8 and most of those were for sales from 2,000 to 10,000 bu. The top 20 sales for the year ranged from $8.49 to $6.98.

By Memorial Day 2012, grain elevators across the Midwest were left wondering what price it would take to pry the last of the 2011 crop corn out of farmers' bins. Farmers like Jerry Demmer of Clarks Grove, Minn., were typical. He was virtually sold out.

"Landowners think all of us sell at the high, and they will price rents accordingly," he says. But Demmer had sold out of his 2011 crop and had two-thirds of the 2012 crop sold before the first of June at $5.60 -- plenty good enough to cover breakeven prices at $4.75 to $5. He's since sold out of 2012 crop, "happy I don't have to ride the roller coaster of prices worrying about last season's corn," he said. Now he's turning attention to 2013.

"With the acres planted to corn last spring, we were close to having $4 corn at harvest, not $7.50," he said. "Guys who had grain in the bin were taking a gamble. One inch of rain each week in July throughout the Midwest could have turned the tables. But when grain prices are this volatile, I don't hold out for the top. My attitude is you can never go wrong covering your bottomline."

Bachman empathizes with that attitude. "Timing the market is hard. Despite opportunity for $8 corn, there are plenty of $5s and low $6s on the list for 2012," Bachman said.

Read and comment on all DTN Ag Business Benchmarks on the Minding Ag Business blog.

Follow Marcia Tayloron Twitter@MarciaZTaylor.

Posted at 4:37PM CST 11/07/12 by Marcia Zarley Taylor
Comments (1)
Markets down hard today! The sooner we run out of grain the better I guess.Don't make much sense, when they say we have to curb usage. There is no more grain today than there was a week ago.
Posted by Raymond Simpkins at 5:14PM CST 11/09/12
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