Next-Level Grain Selling Strategies to Combat Low Prices in 2024

As harvest begins in 2024, many producers find themselves with fewer forward-contracted bushels than expected. Favorable nationwide crop condition reports and larger anticipated stocks-to-use ratios have plummeted major crop prices, leaving grain farmers feeling uneasy about their financial future.

1. Leverage Local Basis

In many regions, basis is strong. Taking advantage of cash sales during harvest could help. If you still want exposure to rising prices, consult your market advisor or broker about an ownership replacement strategy. This way, you avoid the high cost of owning and storing the physical commodity while maintaining some market exposure. This grain selling strategy will free up some timely cash flow for your operation as well.

2. Hedge 2025 New Crop

Consider hedging the 2025 crop at its relatively higher prices instead of holding two years of unpriced grain. Surprisingly, 2025 prices may already be above break-even for many producers, offering an opportunity to reduce your exposure to low prices while still undersold on the 2024 crop.

Another option to explore with your grain merchandiser is accumulator contracts. This may allow you to deliver 2024 grain at a premium but may commit you to deliver bushels in 2025 as well. These contracts can produce cash flow now and increase current revenue. Beware, though, they might limit some profits in the future if prices rise above your pre-determined level. Every contract is different, so analyze them carefully to see how they might fit into your overall grain marketing plan and improve your present cash flow.

3. Explore Insurance Options & Farm Programs for Potential Payments  

Talk to your Compeer Financial insurance officer about shallow risk products for 2025, such as Enhanced Coverage Option (ECO), which offers significant protection levels with new increased subsidy levels. Compeer’s digital tools can help you estimate ECO and Agricultural Risk Coverage (ARC) payments too. Ensure you stay ahead of any potential changes to programs that may benefit your operation by staying in close contact with your provider.

4. Employ Tools to Help Manage Margins

Compeer's Margin Manager tool helps you calculate break-even prices and make informed decisions to lower your overall cost of ownership, especially during times of uncertainty. Enter in your numbers and get a clearer picture of the prices you need to capture.

5. Evaluate Your Financing Structure

With less available cash flow, make sure your financing is structured sustainably for your farm. Can you adjust repayment schedules, explore interest-only options or restructure existing loans to improve your cash flow position?

Discuss options with your Compeer financial officer to ensure you have the liquidity to cover operational costs without the burden of unfavorable loan terms. This proactive approach allows you to focus on long-term growth and profitability, even in a volatile market.

These are just a few next-level strategies to consider as you face a low-price environment. Staying engaged with your risk management plan and working closely with your advisors will help you navigate the current challenges and ensure smoother sailing in the future.

Contact your local Compeer financial or insurance officer to tailor solutions to your farm's needs.

Compeer Financial can provide assistance with agri-business finances and operations based on historical data and industry expertise. Compeer does not provide legal advice or certified financial planning. Compeer Financial is an equal opportunity employer and provider, and an equal credit opportunity lender.