Smart Strategies for Farmers Holding Last Year's Grain

Navigating grain markets can feel like a guessing game, especially if it's not your favorite part of farming. Many farmers excel at raising strong crops and yields but often tune out the markets, missing opportunities or falling into a wait-and-see approach. If you're holding onto unsold grain from last year, you're not alone-the USDA's September 2024 Grain Stocks report shows on-farm corn stocks jumped 29% from the previous year, reflecting a growing trend of delayed sales.

The good news? With a little time and effort, you can sharpen your grain marketing skills and make decisions that boost your prices and profitability. Here are some practical steps to help if you're undersold on last year's grain:

Assess Your Storage Costs

Storage gives you time to wait for better prices, and it comes at a cost. Factors like electricity, labor, depreciation, and interest add up quickly. According to Iowa State University's Ag Decision Maker, these costs can range from $0.31 to $0.97 per bushel per month depending on your setup. That means even a few extra months of storage can significantly impact your bottom line. Take a close look at your storage expenses and ask yourself if holding onto your grain is still worth the cost. If prices aren't improving enough to offset your expenses, it might be time to sell some of that inventory. Being realistic about storage costs can help you avoid turning a tough situation into a worse one.

Monitor the Market for Short-Term Opportunities

Grain markets are always moving, influenced by global demand, weather, and other unpredictable factors. For example, recent USDA reports suggest that tighter U.S. corn supplies could support prices in the coming months. These short-term market swings can offer great selling opportunities if you're paying attention. Even if watching the markets isn't your favorite thing to do, you don't have to do it alone. Set price targets and keep an eye on trends without letting it consume your time. Selling incrementally during price rallies allows you to take advantage of spikes while reducing your overall risk.

Consider Basis Contracts

A basis contract could be the right tool if you're hesitant to sell everything now and still want to lock in part of your revenue. Basis contracts allow you to secure the local cash price relative to futures while keeping the actual futures price open for later. This can be a valuable strategy, especially post-harvest when local cash markets tend to strengthen.

This approach gives you flexibility. You're locking in the parts you can control while leaving room to capture future market improvements. If managing all this sounds overwhelming, consider asking a trusted advisor to guide you through how it works and help you decide if it's right for you.

Address Cash Flow Needs

Holding onto grain ties up money that could be used elsewhere on your farm. Rising input costs and loan payments can make it tough to keep things running smoothly. If cash flow is tight, selling a portion of your grain now can give you the liquidity to cover essential expenses like seed, fertilizer or equipment payments. Remember, you don't have to sell it all at once. Selling just enough to relieve financial pressure while keeping the rest for better prices later can be a smart compromise.

Learn from the Experience

If you're undersold, it's a chance to look back and learn. What worked? What didn't? Many farmers fall into the trap of waiting too long or letting emotions cloud their decisions. Reflecting on these experiences can help you build a more proactive marketing strategy moving forward. Grain marketing doesn't have to be perfect-it just has to be consistent and informed. By setting clear goals and following through, you can improve your results over time.

Develop a Proactive Marketing Plan

The best way to avoid being undersold in the future is to plan ahead. A proactive marketing plan involves setting price targets, diversifying your tools (like forward contracts or options), and staying informed about market conditions. When you approach grain marketing with a structured plan, it takes the stress out of decision-making and leads to better outcomes. Farms that adopt diverse marketing strategies are better equipped to handle volatility. Instead of reacting to the market, you can take control and make decisions based on what works best for your operation.

Looking Ahead

Grain marketing might not be the part of farming you love most. With a little effort, you can turn it into an area of strength. By evaluating your storage costs, watching for short-term opportunities, and planning ahead, you can take control of your grain marketing and make it work for you.

If you're feeling overwhelmed or unsure about grain marketing and moving last year's crop, you don't have to tackle it alone. Contact Storm Hostetter, Sales Director at Total Farm Marketing, at 701-719-8100 or [email protected].. Storm and the team at Total Farm Marketing can help you build a marketing plan tailored to your operation, so you can focus on what you do best-farming-while knowing your grain marketing is in good hands. Total Farm Marketing utilizes a powerful rules-based approach that leverages artificial intelligence technology and data-driven tools to remove personal bias, help you manage market challenges, and seize price opportunities.

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