The recent rally in grain prices was a welcome surprise to farmers, and many of them jumped at the opportunity to sell right away for cash. Tanner Ehmke, Lead Grains and Oilseeds Economist with CoBank, said farmers took the money and ran.
“Well, think back to when farmers were early in the grain rally when they had such high grain prices. I don’t think they really cared what the basis was at that point in time. They saw higher wheat prices, higher corn prices, higher soybean prices, higher everything, and the farmer had bills to pay, and farmers needed cash to pay bills. They said, ‘I am not going to sit on this. I’m not going to do an HTA. I’m not going to do a basis contract. Here’s the grain. Give me cash.’”
Ehmke says the opportunity was brought on by the variable weather conditions across the Plains and Midwest and the low wheat yield. He added that while the immediacy has passed, those who did not take advantage of that rally may still be able to realize additional profits.
“That was really the impetus there, I think, for a lot of those cash sales. They just have bills to pay. They saw a number that they liked, and they took the cash and ran with it. And they’re probably in a much better position now than a lot of people who did not sell on that rally. Now, that’s not to say that there aren’t opportunities for farmers to continue to capture higher prices. There are some marketing strategies they can employ, but those farmers that sold hard and sold early are sitting in a much better position than those who did not.”
He encourages farmers not to go it alone, but talk with your merchandiser, banker, and broker to put together a winning strategy.