Dan (left) and Brian Voss

Dan (left) and Brian Voss are working on their marketing plans, hoping to lock in a profit for the 2020 growing season. Dan said he is willing to forward contract his crops up to the crop insurance guarantee, while Brian has gone up to 80% of his crop in the past couple of years.

PALO, Iowa — The 2020 crop has not touched the field, but many farmers have already made plans for where it will go when it comes time for deliveries in a year.

Marketing and forward contracting crops has become an essential part of a farming operation, and in times when there are numerous uncertainties, it’s a relief for some if they are able to lock in a profit ahead of time.

“I always market a fair amount ahead,” said Dan Voss, who farmers in Linn County, Iowa. “If you are selling at a loss, you can’t go on very long. Four dollar cash is a big key for corn, and we used to say $10 soybeans, but last year anything over $9 was good.”

A pair of critical trade deals, the United States-Mexico-Canada

Agreement and a “phase one” agreement with China, are in the works, helping give a little more certainty to the market. However, following headlines and markets during these times can cause some extra homework for farmers.

Dan’s son, Brian, who farms near Atkins, Iowa, said he was following some tweets last spring regarding the lack of corn being planted due to weather, stating the expectation was for corn prices to get a boost over the next year.

“There’s been a boost,” the eastern Iowa farmer said, “but I think they would tell you it’s not the boost we thought it was going to be. We didn’t see the humongous market shift I think people thought we would.”

The corn rally for the Vosses was about $1 in their area in 2019, they said, which “is still pretty big,” Dan said.

One of Dan’s methods is to simply listen to what other farmers are doing and react accordingly.

“When we get a rally and I start hearing some local chatter that ‘by God, I’m not selling anything more’ and they are locking their bin doors, that’s the time I start thinking about selling,” he said.

By selling at those times, Voss is able to lock in some profits if the rally suddenly stops, as opposed to farmers who may have to settle for less by waiting.

Brian said that in the past couple of years, he’s been about 80% forward contracted for his crops, while Dan said he is willing to forward contract up to his crop insurance guarantee.

As far as when to take a profit, Dan said he considers two numbers for gross price per acre: $600 for soybeans and $800 for corn. When contracts start hitting levels that would give him those price points, he said it’s not hard to lock it in.

John Payne, who works with Daniels Trading, said he expects volatility to emerge in the corn markets in 2020. He said if weather becomes an issue, contract prices could hit the $4.50-$4.60 range again.

“There’s really been nothing changing here, but outside of supply problems I don’t think you’ll see a big push (higher),” he said.

For soybeans, Payne said there is optimism as he looks at factors such as Chinese buying as they recover from African swine fever and replenish their herd. However, he expects soybean acreage to be higher, which could impact prices.

“I think we are going to see an 85-87 million acre number, but the question will be, will demand come back?” Payne said.

He said if exports are staying steady, around 50-55 million metric tons, that should make up for any additional supply, and a mid-$10 range is possible throughout this season.

One factor that is impacting marketing this year is not knowing if there will be a Market Facilitation Program like there has been the past couple of years in response to tariffs, Brian Voss said. The Vosses farm primarily in Linn County, which had a $66 per acre payment rate from the MFP, according to the USDA.

“Not really knowing if that’s coming really changes things,” he said. “Obviously you want the best price available, but you are put in a position where you want to sell your breakeven, but you don’t know what your breakeven is because you don’t know if you are going to get a check for however many dollars an acre.”

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