How do you guys decide on your crop contracts? Prices aren't the best right now, but not as terrible as they could be either. I'm a little gun shy after the drought we had a few years back. I was panicking trying to figure out how to fill it. Everything turned out okay, but makes me think about it every year. I'm only around 160 crop acres, but every dollar helps as I keep trying to push forward. An old timer told me not to worry about it. Said he quit doing it years ago because it seemed to just average out over the years and wasn't worth the hassle. I know we don't have a crystal ball. What's your method?
- Thread starter Nick m
- Start date
Yea. Wish I was better at marketing.
I think foreward contracting 1/4 to 1/3 of the crop lets you cash in on better prices and not paying storage waiting for the harvested crop to go up....
But boy it's hard to pull the string and make it happen when the crystal ball is always so murky.
The big guys can sell early and buy paper contracts with floors and set themselves up to gain some crop rallies for 10-15 cents a bu costs.
Us little guys can't buy into too many 5000 bu contracts like that to hedge our bets, the game is just too large.
Still and all, seems the big guys are starting to fail again, is little guys seem to carry on until we don't want to. Must be so,etching in that.
Paul
I think foreward contracting 1/4 to 1/3 of the crop lets you cash in on better prices and not paying storage waiting for the harvested crop to go up....
But boy it's hard to pull the string and make it happen when the crystal ball is always so murky.
The big guys can sell early and buy paper contracts with floors and set themselves up to gain some crop rallies for 10-15 cents a bu costs.
Us little guys can't buy into too many 5000 bu contracts like that to hedge our bets, the game is just too large.
Still and all, seems the big guys are starting to fail again, is little guys seem to carry on until we don't want to. Must be so,etching in that.
Paul
coonie minnie
Well-known Member
Know your costs.
Know how much storage you have- price and delivery at harvest is usually THE poorest price of the season.
Know the risk if you can't deliver.
When you get what you see as an acceptable margin, pull the trigger on some, but not all. Then write down why you did it... your numbers, and why you felt you should do it.
After 20 years of forward selling milk, I've found it easier to live with having the market go higher after I did something than have it go lower after doing nothing.
this may sound cynical, but I like people who do nothing in milk. I know I'm ahead of them. I know my cash flow months ahead, and if opportunity presents itself, I can jump on it without worry. Keeps the banker happy, too. You want he or her on your side. They should call you "Mr." and not "every two hours."
In the end, it may or may not make you more money. But it can smooth out some awful bumps. Those bumps have created divorce, bankruptcy, suicide. Look out for them. If this is a tool to "grade" out those bumps, do it.
Know how much storage you have- price and delivery at harvest is usually THE poorest price of the season.
Know the risk if you can't deliver.
When you get what you see as an acceptable margin, pull the trigger on some, but not all. Then write down why you did it... your numbers, and why you felt you should do it.
After 20 years of forward selling milk, I've found it easier to live with having the market go higher after I did something than have it go lower after doing nothing.
this may sound cynical, but I like people who do nothing in milk. I know I'm ahead of them. I know my cash flow months ahead, and if opportunity presents itself, I can jump on it without worry. Keeps the banker happy, too. You want he or her on your side. They should call you "Mr." and not "every two hours."
In the end, it may or may not make you more money. But it can smooth out some awful bumps. Those bumps have created divorce, bankruptcy, suicide. Look out for them. If this is a tool to "grade" out those bumps, do it.
Talking corn / beans here........usually have to borrow some crop input money...seed fertilizer ,weed control chemicals...due in Dec......so contract enough to cover. Usually hit an OK price during late Spring /early Summer.
Just lets me sleep better and not be forced to sell at low harvest price.
John
Just lets me sleep better and not be forced to sell at low harvest price.
John
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