I will call these my LFSC costs.
These four costs would be about 2008-2011 SoybEAN CRop oUTLook
75% of the variable costs each farm has to manage each year. A farm Scenario 2008 2009 2010 2011 with a lot of land that is paid for is Carry In 140 135 214 312 now at a huge financial advantage Planted Acres 74,800 75,800 76,500 77,000 and would have a lot lower cost of Harvested 73,300 74,663 75,353 75,845 production and profit potential. yield 40 42 43 44
I use a combination of four fac- Production 2,934 3,136 3,240 3,337 tors when making cash and new- Imports 10 8 8 8
Total Supply 3,084 3,279 3,462 3,657
crop marketing recommendations.
1. Look at the ROI (return on in- Feed vestment) that a sale provides. Crush/Mill 1,785 1,815 1,870 1,925
2. Evaluate the relative price level Seed/Other 164 150 150 150 you are at vs. the prices that have Exports 1,000 1,100 1,130 1,165 been available over the last three Total Use 2,949 3,065 3,150 3,240 years. Carry out 135 214 312 417
3. Look at the supply-demand pro- Stocks/Use 4.6% 7.0% 9.9% 12.9% jections for the next two to four This working spreadsheet looks ahead at the soybean crop and usage scenarios for the years. next four years. No significant ending stocks increase shows until 2011.
4. Look at the seasonal price pattern.
The concept is that your best cash
and new-crop sales opportunities
for corn and soybeans are usually
in the March-July time period. Buying the right revenue insur- 2008-2011 CoRN CRop oUTLook
ance product is an important part
of your overall marketing plan. I Scenario 2008 2009 2010 2011
have usually bought the 75% level. Carry In 1576 1,120 927 877
PlantedAcres 87,000 90,000 92,000 94,000
marketing approach for 2009 Harvested 79,300 82,350 84,180 86,010
Using these four factors, here is yield 151 156 158 161 my approach for the 2009 crop. Production 11,974 12,847 13,300 13,848
First for corn. With my main vari- Imports 15 10 10 10
Total Supply 13,565 13,977 14,237 14,735
ables (LFSC) locked in, I know that with a conservative yield that $6.50 Feed 5,200 5,500 5,700 5,700 December 2009 corn futures pro- Crush/Mill 1,315 1,370 1,380 1,380 vides at least a 15% ROI, and that at Ethanol 3,900 4,100 4,200 4,300 $6.90, the ROI is above 30%. Seed/Other 30 30 30 30
I also learned in 2008 the de- Exports 2,000 1,100 1,130 1,165 mand destruction that occurs when Total Use 12,445 13,050 13,360 13,460 corn rallies above $7.00. So I am Carry out 1,120 927 877 1,275
Stocks/Use 9.0% 7.1% 6.6% 9.5%
willing to make a 10% sale at $6.50 and a 10% sale at $6.90. This working spreadsheet evaluates different acreage, yield, and usage scenarios. Corn
I will use the same concept for stocks and supply-demand ratios stay very tight for the next two to four years. my 2009 soybeans. With my LFSC locked in, I know that at $13.90
November 2009 soybeans I can make a 20% ROI growing soybeans, and if the November 2009 soy-
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