Marketing is simple, it is just not easy

I have no training to speak of or education in commodity marketing.  Maybe that is why people like Arlan Suderman and Mark Welch seem profound.  I heard Dr Welch share his insights on marketing last Thursday.  He discussed the forecast corn crop and its effect on prices in the fall.  Going in to harvest, corn stocks are expected to be at a 53 day supply.  That is way off the average ending stock of 86 days supply.  Considering intended acres, a very average crop will hold next year's ending stock even.  A decent crop of 154 bushels per acre will grow the average ending stocks and maybe drive down prices a bit.  160 bushels er acre could have a big effect on prices.  I have a hard time saying that we could even make a good educated guess right now as to which direction this will go.

Forecasters are saying that our current La Nina cycle is playing out and we can expect more "normal" weather.  This could mean a dryer spring, early planting, and a good start to the crop.  Could a dryer spring mean a dryer summer and a more profound drought than last year?  Could the promise of record corn acreages change some minds and lead to lower acreages and more beans?  There are no real answers.

Ethanol consumption is leveling off worldwide, but higher petroleum prices could stimulate the growth of E15, and move demand higher.  One thing Dr. Welch pointed out is that China grows nearly as much corn as the US.  They currently import a good bit of corn to feed their growing livestock numbers.  The Chinese do not like to import food.  They currently have a ban on GMO corn.  If they open up to GMO corn they could increase there own production and reduce needs for imports.  That create a bearish outlook on corn.

Welch also discussed how to use crop insurance as part of your marketing plan.  Crop insurance can make it easier to sell corn in a favorable market cycle even when it is hard to predict how much corn you will actually have.  His marketing recommendations were

• Be a low cost producer
• Lock in profitable prices
• Watch the market and be flexible
• Don't pick one point to sell everything
• You can't control price, but you can decide when today's price is good enough
• Sell based on seasonal price tendencies