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SENTINEL TRIBUNE Wednesday, May 29, 2013 Page 7 Understanding marketing in years with late planting and prevented planting By Bret Oelke fewer corn acres on their farms - they could tract. There normally is not a non-delivery the harvest price discovery period for reve- U of MN Ext, see significant reductions in the amount of clause in this contract. Sellers (farmers) are nue-based crop insurance. The price dis- corn produced. Growers who have already expected to deliver grain; if unable, they covery period for crops commonly grown The potential of reduced production due forward-priced any significant amount of must find grain to fill the contract, in our region is during October. If produc- to delayed planting in 2013 because of the production may end up having sold more *Futures fixed or hedge-to-arrive con- ers panic and lift the positions before then, cold, wet start to the growing season could corn than they end up producing. Farmers tracts: These are also normally considered and the price decreases during the price result in additional challenges in managing in this position, or who expect to be, need to delivery- obligated contracts. However, in discovery period, losses will be increased. marketing. While there is still time to plant approach managing their marketing posi- many cases there is a buy-back clause in the In many cases a combination of the pre- this year's crop and achieve normal yields, tions in a thoughtful, well-planned manner, contract that will outline the circumstances viously mentioned contracts will have been it is important to understand the marketing The first thing farmers need to do is to that allow for non-delivery and the cost to used by growers to price their crops. If that implications if we experience continued review their current marketing actions, exit the contract, is the case, then the lowest cost exit strategy delays in corn planting. 1) What types of contracts were used? *Futures and option on futures contracts: or strategies need to be implemented. Many parts of the United States saw their * cash forward These contracts can simply be bought back Keep in mind that communication with crops, especially corn, devastated by *futures fixed or hedge-to-arrive or sold to offset the futures contract or the grain buyers, brokers and lenders is impor- drought in 2012. In other locations the dam- *futures and/or options contracts option on futures positions. The difference rant so everyone who may be impacted by age was much less severe. But we saw between the sales price (the initial price set these situations will be informed of the reduced yields, which, coupled with the 2) What amounts of grain (espe- with the futures hedge) and the price upon consequences of non-delivery of contracted increase in futures prices, triggered a crop cially corn) have been hedged or forward- offsetting or buying back the contract will grain. Also, unnecessary risk can be avoid- insurance payment. With significant reduc- priced with elevator contracts? result in either a gain if the buy-back price ed by waiting until the harvest price discov- tions in yield, farmers who typically for- is lower than the original sale price or a loss ery period is in process before contracts are ward-priced a portion of their crop before 3) At what price have each of the if the buy-back price is higher, bought back. harvest found themselves in the predica- contracts been set? For more information on managing agri- ment of having sold or hedged more grain 5) Crop insurance considerations cultural businesses, visit www.extension. than they ended up harvesting. 4) What are the terms of the elevator It is important to understand that to mini- umn.edu/AgBusiness. If planting is delayed and producers contracts? mize risk, any of the contracts that can be change their cropping plans - resulting in *Cash forward: Delivery-obligated con- offset or bought out should be offset during WWG students doing community service Last week WWG students worked cleaning ditches and other projects during their make up snow days. CLASSIFIED ADS SMALL PRICE BIG RESULTS The calendar is printed the last week of each month for the coming month's Sunday .... Monday Tuesday Wednesday Thursday Friday .................................... ................. ....... If you have an item ............. ...................... you would like ............ ........................ Saturday Sentinel Tribune Office in Westbrook or Bubai Food Store in Walnut Grove by the Friday prior to iPublication. We would like to have brief announce- ments of general nature. Some of the items we use are taken from sourcesprevi- ously printed. If you know of changes in these events please let us know so we can correct them. Please take note of the sponsors who bring you this month- ly calendar. 2 9 16 WB-TOPS, 8:30 WB-Library, 10-6pro WB-M&M Pantry, l:30-3pm WB -City council, 6:30pm 3 WG-Micawber Club WG-Legion Post WG-City Council WWG School board, 7 pm WB-Library, 10-6pro WB-M&M Pantry, l:30.3pm WB-Firernen's mtg. Dovray Boosters, 5:30pro 10 WG-Amicus Club WB-TOPS, 8:30 an~ WB-Library, 10-6pro WB-M&M Pantry, l:30-3pm WB-Lion's club 17 WG-Firemens' mtg.n a WB-TOPS, 8:30an WB-Library, 10-6pro WB-M&M Pantry, l:30-3pm WB-Sen. Cit. potluck, 6pm WB-Library, 10-6pm WB-Sunset Club, l:30pm WB-Museum, 7 pm WG-Legion Auxiliary WG-Keenagerso rl WB-Library, 10-6pm WB-Library, 10-6pm WG-Keenagers a WB-Library, 10-6pm 1 1 WB-Library, l-6pm 4 WB-Library, l-6pm WB-Sen. Cit. Fun time, i~m n 5 1 12 WB-Library, l-6pm 8 19 WB-Library, 1-6pm WB-Library, lO-5pm WB-Kiwanis club, noon 6 WG-Lions Club WB-Library, 10-5l~n~ WB-Kiwanis club, noOla WB-Womens Club, 7:30pm 13 WG-EDA mtg.,6 pm a WB-Library, 10-5pro WB-Kiwanis club, noon WB-Ambulance squad mtg. 20 WB-Library, 10-5pm WB-Kiwanis club, noon WB-Library, 10-5pm WB-Library, 10-5pro WB-Library, 10-Spm WB-Library, 10-5pro 7 14 21 1 8 15 22 23 24 25 26 27 28 29 30 Country View Senior Living ! "Top quality living and care" Walnut Grove, MN 507-859-2133 Westbrook - Walnut Grove Funeral Home Nathan & Valerie Stephens Westbrook, iN Phone 507-274-6700 Walnut Grove, iN Phone 507-859-2161 159O62 18848O Westbrook, 507-274-5555 Serving communities in South Dakota, Minnesota, and Iowa Storden, MN Phone 507-445-3417 175~9~