Marketing 2024 Corn

Amy Timmerman - Extension Educator Author

08/01/2024 Added

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As we roll into mid-summer, many farmers are looking for opportunities to do some forward contracting for fall. This has led some farmers to ask, “What is a ‘good’ price for 2024 corn?”

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[00:00:00.680]This is Amy Timmerman, your local crops and water extension educator,
[00:00:05.500]with this week's Extension Update.
[00:00:07.040]As we roll into mid-summer, many farmers are looking
[00:00:11.660]for opportunities to do some forward contracting this fall.
[00:00:13.560]This has led some farmers to ask, "What is a good price for the 2024 corn?"
[00:00:18.840]When asking yourself this question, recognize that "good" is a relative term.
[00:00:23.380]A good price for one farmer may not be a good price for another.
[00:00:27.280]First, determine what you are comparing the price against.
[00:00:31.320]Once you have determined your measuring stick, we can assess the viability of a price.
[00:00:35.780]Here are a few comparisons you may want to make as you consider pricing new crop corn.
[00:00:41.060]1. Lender-provided cash flow budget price.
[00:00:42.180]When renewing your operating note, your lender
[00:00:46.920]provided an estimated cash price for each commodity.
[00:00:50.760]This price varies by bank, but most lenders use $4.75 to $4.90 per bushel for new crop corn.
[00:00:57.080]A benefit to using the cash flow price as a gauge is that it
[00:01:03.140]can help you understand if you will be able to pay back your operating note.
[00:01:07.460]A disadvantage to the cash flow price is that it may not be
[00:01:11.760]a true cost of production for the given crop.
[00:01:13.260]Depending on how your lender structures your cash flow budget, this price may be supplemented
[00:01:17.840]by other sources of income, including estimated government payments,
[00:01:23.760]off-farm income, and income from other crops or livestock.
[00:01:25.880]2. Break-even price.
[00:01:26.880]Having accurate cost of production can make
[00:01:30.660]it easier for you to know if the price being offered will earn you a profit.
[00:01:36.280]Changes in production expectations, such as the need for additional inputs to combat pests
[00:01:41.480]or changes in yield expectations, make break-even estimates
[00:01:47.180]a moving target throughout the growing season.
[00:01:48.180]University of Nebraska-Lincoln crop budgets estimated the cost of production
[00:01:52.880]for center-pivot irrigated corn to be between $4.17 and $5.03 per bushel.
[00:01:56.680]There have been opportunities in 2024 to lock in some of your production at or slightly
[00:01:58.560]below the current cost of production estimates.
[00:02:04.680]3. Crop insurance price. Crop insurance revenue protection policy calculations
[00:02:11.600]are based on the projected price, which is the average of the
[00:02:17.140]closing prices of the December corn contract during the month of February.
[00:02:22.740]This price gives you a sense of where the future market expects the price of a commodity to be at harvest.
[00:02:28.920]For the 2024 corn crop, the projected price is $4.66 per bushel. The projected price can be adjusted
[00:02:36.540]to a cash price by adding your expected harvest basis. 4. Market price estimates.
[00:02:44.420]Most farmers have an idea of where they think the market will go.
[00:02:49.620]This price expectation can also be used to gauge the current price.
[00:02:52.620]However, make sure your price expectation is realistic.
[00:02:52.720]The 2020-24 WASDE report estimates cash corn prices
[00:03:01.760]for the upcoming crop at $4.40 per bushel.
[00:03:08.400]Once you've determined which measurement you are going to use to gauge the price, write a grain marketing plan.
[00:03:14.640]A pre-harvest grain marketing plan should break your anticipated sales into smaller units and outline specific price targets and sales deadlines.
[00:03:20.480]This allows you to compare the current price to your marketing goals, removing some of the emotion for marketing.
[00:03:26.160]You may feel pressure to sell a lot of grain during the growing season this year.
[00:03:31.200]Caution must be given not to oversell pre-harvested bushels.
[00:03:37.680]Although price risk is reduced by pre-pricing, dryland producers especially are still exposed to yield risk.
[00:03:43.680]In your grain marketing plan, you should determine the amount of your expected production that you're
[00:03:49.600]comfortable pricing during the growing season. This has been Amy Timmerman with Nebraska Extension.

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Marketing 2024 Corn

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