When’s the best time to sell a boat?
Answer…right before summer when everyone wants to go boating
When’s the best time to sell ski pants?
Answer…right before winter when everyone wants to go skiing
When’s the best time to sell sweet corn?
Answer…right before the rest of the sweet corn producers when everyone is craving their first ear for the year
and the burning question…
WHEN’S THE BEST TIME TO SELL CORN?
The first few questions were simple, don’t get me wrong, but this one’s not too hard either. Let me explain. Think about the time of year the most corn is hauled to your local grain buyer (elevator/processing plant/co-op/feeder) from your farm. Is it harvest? For quite a few of you, I would guess that it probably is.
So, let’s roll with that. Let’s say most of your corn is sold at harvest.
As I write this article, the Farm Guy Next Door has just started planting his 2019 crop. No corn is in the ground yet, but some beans are. Just because there’s no corn planted yet, does that mean I can’t estimate how much corn will have to be sold at harvest? No, no it doesn’t. Judging by the plan the Farm Guy Next Door has for his corn acres, and the average yield from the past 10, 20, 30 years…I can get a good estimate of the bushels that will need to be sold for harvest.
Corn Acres x Average Yield – Bushels that will be Stored on Farm = Bushels to Deliver at Harvest
After you do that calculation, you’ll have a pretty good idea of how many bushels you’ll need to sell at harvest. The best part about knowing that number is that you you can make marketing decisions for a percentage of those bushels BEFORE harvest rolls around. That’s right, you don’t have to WAIT until you deliver at harvest to LOCK IN THE PRICE on some of your corn!
So now, the answer to the original question: WHEN IS THE BEST TIME OF YEAR TO SELL THOSE HARVEST BUSHELS?
Past experience is usually one of the best teachers, and the same is true when it comes to the trend in corn price. We could look at the past 10 years of price trends, but why not get some extra confidence and look at the past 20 years!
The University of Nebraska – Lincoln put together the graph below illustrating price trends for corn over the past 20 years, which indicates that…
April-June is the best time to market if you have corn to sell for harvest.
Why is April – June typically the best time of year to price your grain you’ll be delivering at harvest?
The big reason is that during that time frame, there’s the most uncertainty surrounding how much corn the U.S. will produce. In April, the U.S. still has a lot of planting left to go and by May & June, there are weather concerns that can threaten the crop. It’s no coincidence that the time frame you worry most about your crop’s survival is the same time frame the market worries about it. For example, if there’s a hail storm forecasted in June that has the potential to take out a big portion of Nebraska’s corn crop, you might see prices rise in anticipation.
Why do prices typically fall from July to October?
Again, it goes back to the risk associated with the U.S. corn crop meeting production expectations. After the crucial time in the corn plant’s life has passed, the market becomes less concerned about that the U.S. will harvest a crop smaller than is estimated. Less risk = less chance of price fluctuation.
Remember my questions at the beginning of this post?
You know without hesitation when the best time is to sell your boat, your ski pants, and your sweet corn, so why is it so hard to sell your corn when you know the time frame that’s historically the best?
Obviously, the prices today are not ideal. However, don’t let that stop you from selling when you have an opportunity to sell above your breakeven price. Sure, we all wish (and hope!) the market would move higher, but always remember that you’re in this to farm another year. So, handle your grain marketing the same way you would any other business decision — if the price makes you money, SELL SOMETHING. Don’t bet the farm that this will be the outlier year that bucks the 20 year trend and goes higher after June…