 | Zach Parish is a grain merchandiser at KAMO Grain, Inc., located at 3708 North Free King Hwy in Pittsburg, KS. Zach graduated from the University of Arkansas with a bachelor’s degree in Agricultural Business, specializing in grain marketing and merchandising. KAMO Grain started as a small, family owned, country elevator in 1990, and has now grown to serve producers and elevators all over the four state area with their grain marketing needs. For more information or to reach Zach call 620-232-5800. |
Agriculture
2013-04-29 15:20:53
Will the grain market turn around this summer?
Q-I have been holding grain in my bin since fall harvest in anticipation of getting a premium during the summer months. The last USDA market reports have substantially lowered the market and made me think about emptying my bins to avoid losing more. Should I cut my losses and sell out or will the market turn around in the summer?
A-A common question that I have gotten several times since the USDA report that was released on March 30th is “when will these markets bounce back?” It is always a hard pill to swallow when markets fall that rapidly and you still have grain that hasn’t been sold yet. But, that is the nature of the beast. There is always risk involved with holding grain. Then again, is this the right question to be asking? Should we be more concerned with what the market is doing as a whole, or what our individual situation is?
The answer is we should pay attention to both. It is important to pay attention to what’s happening with the markets worldwide, because it will likely affect local markets. There are numerous items that should be taken into consideration—weather, planting conditions, planted acres, ending stocks, acres harvested, value of the dollar, international relations, crop reports, etc.
But the part producers sometimes do forget about is knowing where they stand on their own position. What is your break even cost? What is your personal profit goal? What are current profit levels? How do current profit levels fit into your long term goals? These are very relevant questions that often get overlooked. The key to being successful over the long term is to know where you stand and take advantage of profitable price levels when they become available. It’s not a sprint, it’s about long term profitability.
Yes, it is very disappointing when corn prices drop from $7.50 to $6.50 per bushel in a matter of a couple of days. There is no way to beat the market. However, this is where you need to know your personal position. If your breakeven point is $4.50, you still have $2.00 per bushel of profit available to you. It’s on the table and can be taken.
20,000 bu X $2.00 = $40,000 PROFIT
Sometimes it’s easier when the numbers are in front of you. Each individual has a unique situation, so it’s vital that you know exactly where you stand. Profit levels we are currently seeing will not likely be around forever. I strongly encourage all producers to take a deep look at where they stand, and see how current profit levels fit into their long term plans. If you would like help planning or have any questions, I would be more than happy to talk it over with you.
