You don’t need a crystal ball to plan all of your crop sales decisions. For many producers, the availability (or shortage) of grain storage determines crop sales and delivery timing. Thinking ahead and being proactive in your decisions about sales and storage will allow you to make more profitable sales decisions and gain a better sense of your primary markets.
Start with Production Estimates
You can begin by using the total production acres for each crop you will produce and calculating an estimated yield using either your actual production history (APH) or your own yield averages from the previous three years (to account for the ongoing hybrid or varietal improvements). Having a working current production estimate (CPE) by crop allows you to plan how much you can store to capture higher values for deferred delivery and how much you must sell and deliver off the combine, which typically gets the lowest prices of the year.
Advance Planning Creates Options
Planning in advance for bushels that you must deliver as you harvest them gives you the opportunity to evaluate cash flow, research markets, negotiate moisture discounts you can live with, and give your buyers “Good ‘til cancelled” (GTC) standing offers to price grain for harvest delivery that
- Finds a home ahead of time, when an elevator is still hungry for grain that can’t be stored and uncertain of maximizing its capacity
- Approaches minimum profitability targets during market uncertainty
Unless it’s a drought year, you already know that you won’t achieve maximum price objectives for harvest delivery compared to prices you can get for deferred delivery. You can either accept it and move on in your planning process, or you can use the information to build financial justifications to expand your own grain storage.
Take Control of Your Farm’s Future
It is important to think about your the future of farm and deliberately guide it, step by step, toward what you want it to be. Maximizing the value of your grain sales revenue by being able to deliver it when the market wants it most is a key aspect of farm profitability. If you would like help establishing and attaining goals for your farming operation, contact FamilyFarms Group. Our experts will talk with you about the current state of your farm and your vision for the future and help you determine what steps to take to get you there. Click the link below for a free consultation.