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Take advantage of available profits

by Devin Schierling

As final field preparations are nearing completion and the first seeds of the 2013 wheat crop are going into the ground, it’s important to step back and look at your operation’s marketing plan.

The foundation of this plan is the revenue guarantee provided through Federal Crop Insurance. The base crop insurance price was established at an all-time high of $8.78 for the upcoming year. This price, along with the Actual Production History (APH) increase from the Trend Adjustment, (TA) has provided producers with the ability to insure guaranteed revenue that is greater than the expected cost of production.

Integrating your crop insurance into your grain marketing is the next step in creating a profit-based marketing plan. There are many factors (out of our control) that affect the new crop value of wheat. Whether it’s the drought in the Ukraine and Australia or increased planted acres in the United States driving the price, when was the last time you were able to contract $8 (plus) wheat? . I’m not certain what $8 (plus) wheat will look like from a price perspective nine months from now, but from a profit perspective we have only seen this type of opportunity once in the last ten years.

One of TMA’s Foundational Principles of Risk Management is to lock in profit when profit is available. With your largest expense-fertilizer-primarily applied, it’s time to identify what your risk management needs are for your operation and develop a customized plan to take advantage of today’s profit potential.