Recent weather moves in commodity markets should have us revisiting our marketing plan. Are there sales to be made right now?
Futures Prices
Upcoming Dates and Opportunities:
Virtual TSCRA Convention – September 15-16
Virtual Master Marketer Seminar Series – September 29 – October 29
TCFA 2020 Annual Convention – October 5
New Section – Local Market Conditions
For the last year we’ve collected data on local market conditions, and now we are going to begin providing local cash prices on a weekly basis for a variety of commodities as part of each HPAW. If you have any suggestions please feel free to contact us.
AMS Average Local Auction Prices (Tulia, Dalhart, Amarillo)
Local Cash Bids – 8/31/2020
Breakevens and Revisiting Your Marketing Plan
The 2020 Corn Belt Derecho, and the recent surge of hurricanes provided a lift to commodity prices over the last week. As we’ve said before, the perception of the damage may be as important as the actual physical losses as far as price is concerned. Whether the losses are substantial or end up representing a small portion of each crop, the perceived losses provide a marketing opportunity in the short-run.
Each year Texas A&M AgriLife Extension publishes budgets for each district, including the Texas High Plains. These budgets provide a template for financial planning and include estimated breakevens at the district level. Keep in mind, these budgets are not to be used without updating, and you should supplement the templates with your own data. That being said, we can use average breakevens for the area to identify marketing opportunities.
Primary breakevens we will consider are
- Irrigated Corn w/ 225 Bu/Acre Yield: BE for VC = $3.06, BE for FC = $4.02
- Irrigated Sorghum w/ 60 CWT/Acre Yield: BE for VC = $6.05, BE for FC = $9.22
- Irrigated Wheat w/ 50 Bu/Acre Yield: BE for VC = $4.44, BE for FC = $7.84
- Irrigated Cotton w/ 1500 Lb/Acre Yield: BE for VC = $0.41, BE for FC = $0.52
- Dry-land Cotton w/ 400 Lb/Acre Yield: BE for VC = $0.71, BE for FC = $0.87
The recent, relatively unexpected weather premiums led price in the futures, and accordingly cash, markets up. At time of writing DEC ’20 Corn is sitting at $3.60/Bu, the second highest value since COVID-19 induced declines in March. Average regional cash price is $3.78/Bu. Both cash and futures are high enough to cover variable costs, and technical factors suggest that another major weather event will be necessary to break the $3.60/Bu range on the board. Dr. Mark Welch addresses his thoughts on marketing corn in his latest weekly update.
At time of writing, JUL ’21 Wheat is $5.02/Bu, the highest value since early June. It may seem early to consider pricing wheat that is not planted yet, however pricing small portions like 10-15% of the crop can ensure a price above breakeven. Again, you can see Dr. Mark Welch’s thoughts on his wheat marketing plan in his latest weekly update.
Finally, at time of writing, DEC ’20 Cotton is $0.6533/Lb. Along with potential hurricane losses, the current weakness of the U.S. dollar is providing some strength to cotton prices. In fact, the current price strength provides the best marketing opportunity since February. While yields are likely lower than expected due to the heat and lack of precipitation on the High Plains this summer, current price on the board provides profit on irrigated yields as low as 1200 Lb/Acre. You can find more in depth recommendations from Dr. John Robison in his latest weekly update.
Chart Challenge
The chart challenge this week can really be only one of two things, and we’ve included the legend as a clue. Good luck!
