Corn and Soy Harvest Is Underway, Now What?
Wednesday, September 28, 2016
Fall is officially here and corn and soybean harvest is underway! According to the USDA 15% corn and 10% of soy is already harvested as of September 26th, 2016. Now, a farmer’s job consists of determining where and how they’ll sell their crop, especially with the challenge of low commodity prices this year. We decided to ask David Reif, Bayer Sales Rep in Michigan, about how farmers plan to market their crop in his territory.
Q: With commodity prices low in 2016, does that make a difference in how farmers will choose to market their crop?
A: “Yes, it definitely does. The pressure to do a better job of marketing is definitely on them. I think they still have the same plan of attack, to try to sell at the highs and hold off on the lows – which is harder than it sounds – but the pressure is higher because with the thinner margin, you have to make sure you’re marketed where you can make some money. Some farmers that need money right away to pay bills will have to sell it right off the combine, and some farmers who are sitting better, they might be able to store the crop longer to wait for a weather catastrophe or a supply shortage or something like that to take advantage of a higher price.”
In 2015, soybean harvest was a record 3.93 billion bushels, according to the USDA (U.S. Department of Agriculture).
Q: Can you tell us a little more about farmers’ marketing plans and how that works?
A: “Marketing and selling your crop is probably the most stressful, but the most important thing that farmers can do to be profitable. Every farm is definitely different when it comes to marketing plans. That’s probably the hardest thing the farm manager has to deal with because that’s basically what can make or break their budget for the year.”
“The markets are extremely volatile, so figuring out when to sell – when is a high, when is the low – for farmers is just so difficult. The futures market – it’s just like predicting weather a month away. It’s just extremely hard to do. So some growers have firms that try to help them with their marketing plans. Elevators in the local area might call farmers and say hey this is a really good price, you should think about marketing some of your crop.”
David Reif (right) is pictured with fellow Michigan Bayer Rep Mark Varner (center) and a local farmer, Mike Richmond (left).
Q: Do farmers market their entire crop the same way?
A: “I would say most farmers’ marketing plans are pretty heavily diversified. They do a little bit of this, a little bit of that, and spread their risk. Risk mitigation is probably the key thing. But every farm is different, so it’s hard to generalize. Some guys will just say, the elevator is open, they’re accepting grain, and just take the price that’s being offered when they come in today. It depends on what’s in your surrounding area, because if you try to take it too far, then it costs too much to transport. Some growers will do forward contracts for their harvest. A forward contract would be, I set the price today on terms that I will deliver the product four months down the road, let’s say.”
David has been with Bayer for almost two years. A native of Michigan, he grew up on a farm and still helps out from time to time on the family farm, where they grow corn, soybeans, wheat, sugar beets, dry edible beans, and pickling cucumbers.
We’d love to hear your thoughts about marketing grain – leave a comment below. Also, share your harvest photos with us on Twitter @Bayer4CropsUS.