Are You Staying Active In Your Risk Management Plan

Apr 14, 2023


Article by Scotty Yerges

The potential for the most combined planted acres of corn, beans, and wheat since 2014 (229.4 million), and very contradicting moisture stories across the country, have producers concerned with both upside and downside potential in the ag markets.
Wheat has been one of the hotter topics as of lately. Current wheat stocks are not nearly as tight as the corn and bean picture, but drought has raised many concerns in our area. I think the two drought monitors below sum it up perfectly……

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In the western region of our footprint, wheat has a severe problem and we have been managing our way through current positions to make sure that we are still on pace with the expected lower production. In the central part of our territory, wheat is hanging on. We have potentially taken the top end off, but if we catch some rains in the near future, we still could have an average crop. We recommend that producers take a good hard look at their current risk management program. Where does your risk lie? Is it in positions that you already have on and you need to manage upside? Or is your farm’s wheat crop still in good shape and you need to have more floors in place in case something changes.

On the other side of the coin, it is easy to look out our back door and develop a one-sided perception.  Let’s entertain some potential numbers for fall corn production….
  • 92 million acres of corn (USDA’s number on the March 31 planting intentions report)
  • Trendline yield is 181bpa (let’s use 179)
  • Annual usage of 14.5 billion
92 million acres x 92% harvest rate = 84.64 harvested acres x 179bpa = 15.150-billion-bushel crop – 14.5 annual usage = 650 million remaining and then add back in a projected carryout of 1.3 billion.

This puts us at a potential of a 2-billion-bushel 23-24 carryout. This is in no way predicting price, but last time we were there, we were closer to $4 futures or lower. We are dry in our area, Texas and Oklahoma panhandle, but as the drought monitor shows, the corn belt is in very good shape when it comes to moisture. Some are concerned about too much moisture for planting, but history has shown us that more rain is better than not enough.

What should you be doing?
  1. Stay active in your risk management plan.
  2. Take a look at what you have done for this fall and have some targets in place to lock in more sales.
  3. Take some time and look at crop rotations and potential production for 2024.
With the recent decline in inputs and the potential for larger carryout numbers at the end of the year, there are still historically some very good opportunities to manage risk out in 24! Again, consistency is key when it comes to marketing, just like all other activities on our operation.
 

Read More News

Jan 16, 2024
As we welcome 2024, we do so with some encouraging rains in the ground and a blanket of snow covering most of the region. We also have optimism in the weather outlook that we might finally break the drought that has created challenging growing conditions. 
Sep 14, 2023
As we look ahead to the 2024 crop year many decisions loom in the not-so-distant future. Federal Crop Insurance, Coverage levels, unit structures, and whether to add SCO or ECO must be selected for the 2024 season prior to the September 30 deadline.
Jul 11, 2023
The USDA end-of-June acreage and stocks report excited the soybean bulls. The most notable number on the report was soybean acreage reported at 83.5 million bushels, down five percent from last year. On the grain stocks side of the report, 796 million bushels of beans are in storage, down eighteen percent from last June. The current drought monitor is looking friendly for the market despite the recent rains in the central corn belt.