Ep. 69 Developing a Market Plan in the Post-Harvest Window

00;00;00;06 – 00;00;27;29
Dr. Ryan Loy
Grain storage introduces real cost and risks that must be accounted for in the post-harvest window. Knowing inventory and price objectives support disciplined marketing decisions. Winter sales can be profitable when gains exceed those storage costs. That and much more on this episode of Morning Coffee and Ag Markets.

00;00;28;01 – 00;00;51;19
Dr. Ryan Loy
In today’s episode, we’re going to explore how farmers can apply pre harvest marketing plans after harvest. Building on the framework commonly used in the pre harvest window with most Midsouth producers finishing harvest, the discussion focuses on the shift from production to value preservation, the importance of on farm inventory management, and how storage cost and price targets shape post-harvest marketing decisions.

00;00;51;20 – 00;01;09;10
Dr. Ryan Loy
Recent improvements in the soybean market, following China’s commitments to purchase U.S. supplies have added context to current pricing opportunities, emphasizing the need for structured decision making during the winter marketing period. My name is Ryan Loy, and with me today via Zoom is Dr. Andrew McKenzie and Mr. Scott Stiles. How are y’all doing today?

00;01;09;10 – 00;01;09;24
Dr. Andrew McKenzie
Doing good, Ryan.

00;01;10;05 – 00;01;10;25
Mr. Scott Stiles
Great, Ryan.

00;01;10;26 – 00;01;27;17
Dr. Ryan Loy
Thank you all so much for joining me. To kick this off, you know, one of the things that Andy and I had recently put together was a guide for marketing in the pre harvest window. And now that we’re here sitting in November, I thought it would be appropriate to kind of apply that approach to the post harvest window.

00;01;27;17 – 00;01;38;28
Dr. Ryan Loy
And so, Andy, if you don’t mind, can you just kind of briefly discuss what that five step marketing plan is for that pre harvest window? And we can talk about how we’ll adapt that in the post harvest.

00;01;38;29 – 00;01;58;10
Dr. Andrew McKenzie
Sure. Yeah. So, so step one is figuring out how many bushels you’re actually going to have to be able to market at harvest time. So it’s on about in the spring planting time year when you start thinking about this right. And you have some projection of what your yields will be, how many acres you’re planting to various crops, whether it be beans, corn or whatever.

00;01;58;10 – 00;02;16;02
Dr. Andrew McKenzie
And then you can have some sort of guesstimate as to, well, I’ve got these many acres I’m expecting to produce this many bushels per acre. This is how many bushels I’ll have. So that’s step one. Then the second step will be trying to get sort of a handle on how much it’s going to cost you bushels per acre to grow the commodity.

00;02;16;02 – 00;02;31;23
Dr. Andrew McKenzie
And, you know, you guys are the experts on that, Ryan. You do all the budgets with Breana and everybody, and those are excellent resources. And I know you also use those budgets for breakeven analysis and so forth. But that would be sort of step two of the plan. So you know, you know, what is it going to cost me.

00;02;31;23 – 00;02;54;10
Dr. Andrew McKenzie
And in any business that’s important, right. Knowing what the costs are going to be to incur. And then once you’ve done that, it’s trying to say, well, what is a realistic profit that I think I could make per acre? And sort of adding that to your production costs, the profit margin you think you need and putting those two things together will then tell you, well if I need certain amounts, dollars per acre.

00;02;54;15 – 00;03;13;25
Dr. Andrew McKenzie
I can then figure out what price I would need to achieve that. And it’s a case of either getting with your local elevator and putting in what we call a targeted contract, which is basically the price you need. If the elevators board price overreaches that, then they’ll give you a forward contract at that price level, and then you’re locked in.

00;03;13;25 – 00;03;19;02
Dr. Andrew McKenzie
Or you can take the onus on yourself and try to use the futures markets to lock those numbers in as well.

00;03;19;02 – 00;03;37;26
Dr. Ryan Loy
Oh that’s perfect. Thank you for that explanation. I think it’s really important when we’re talking about the breakevens versus that profitability margin that we can build into that. And you know, you’re talking about, you know, knowing your production costs knowing how much you’re going to have on hand at the end. And, you know, even though it seems in the post harvest, you may not need to utilize that.

00;03;37;26 – 00;03;59;09
Dr. Ryan Loy
But now in the post harvest window, all you have to do is take that step one and say, now I know how much I have in storage versus how much I may have marketed right at harvest, and you can redo the entire marketing plan just based off of what you have. So I think that’s very important. You know, one of the things that’s a little different when it comes to the post-harvest marketing is those storage expenses, right?

00;03;59;09 – 00;04;16;27
Dr. Ryan Loy
That’s something that will get brought in and so, you know, things such as running the bin and the overhead, depreciation, the interest expenses even. Right. If you’re storing the grain, it’s not being sold. And so there’s going to be some interest expense on that. Right. You have that capital tied up. And then you know, shrinking and some handling expenses.

00;04;16;27 – 00;04;38;19
Dr. Ryan Loy
Right. And those all kind of get brought back into that breakeven price that you had calculated in that pre harvest window. Now you’re going to add those storage cost onto it. And look at okay what’s now the price. If I store for two months let’s say as we talked about in the newsletter what’s that price now going to be that I need to receive in order for storage to make sense for me and those sorts of things.

00;04;38;19 – 00;04;55;25
Dr. Ryan Loy
So, you know, when we’re going through in the newsletter, as you said before, you’re going to calculate that break even price. You’re going to know some profit margin per bushel that you’re going to want to add in there. I think in the case of what I put in the newsletter was roughly about $0.20 on corn, $0.30 on soybeans, and then including that storage in there as well.

00;04;55;25 – 00;05;12;03
Dr. Ryan Loy
And, Scott, if I can pose a question to you, considering all of this, how should farmers incorporate that breakeven price in those storage expenses when setting the post-harvest targets? And really, what is that storage expense? What are the implications for that? When we’re talking about marketing in that post harvest window.

00;05;12;07 – 00;05;27;11
Mr. Scott Stiles
You know, taking a step back, I was thinking about the, you know, the breakeven price. And that may be something that, you know, growers project at the start of the year. But I was thinking that determining that is something that you could have a lot of confidence in, and that may be something that needs to be revisited.

00;05;27;13 – 00;05;45;16
Mr. Scott Stiles
You know, by the time you get to the to the end of the crop year, you know, at that point exactly what all your production costs were. So it may be a good time to revisit. Well, how did my projected budget match up with what I actually spent, and now, is my breakeven price that I projected back in the spring?

00;05;45;17 – 00;06;01;26
Mr. Scott Stiles
Is it still realistic today? And so I think you know, certainly by the end of the year you have a good handle on your production cost, and it may be a good time to revisit that. So that I think would kind of be a good starting place is to make sure that you have a good handle on that.

00;06;01;26 – 00;06;23;10
Mr. Scott Stiles
And then, as you mentioned, the storage expenses, what all goes into storage expenses? Of course, you have a certain per bushel fee for storage if you’re looking at commercial storage, but also you need to look at interest and get some idea of, you know, how long do you plan to store, you know, what are your goals and, you know, do you have an end date in mind in terms of when you want to make your

00;06;23;10 – 00;06;41;06
Mr. Scott Stiles
sale? So think of those things. Storage is not just a 3 to 5 cent per bushel per month fee for the storage, which is common in a commercial setting. But think too about, you know, the interest and your opportunity cost of not liquidating a crop, paying down your crop loan balance. So think about those things.

00;06;41;06 – 00;06;43;28
Mr. Scott Stiles
And how interest you know, impacts those costs, too.

00;06;43;28 – 00;07;00;13
Dr. Ryan Loy
Scott, thank you for bringing that up. And I think that’s really important. One thing you mentioned in there is think about and kind of know or at least have a good idea of when you want to sell those, right? Because that’s really going to hold a lot of those implications, especially for interest expense, especially a lot of this cost is on a per bushel per month basis.

00;07;00;13 – 00;07;15;18
Dr. Ryan Loy
And so, you know, that’s really important to think about. And when you’re looking at the markets, you know, seeing where it’s headed. And is it actually going to get to that point where storage is worth it versus what you could have just sold it for at harvest? And you may have net zeroed on that one or lost the exact same amount.

00;07;15;18 – 00;07;32;15
Dr. Ryan Loy
And you just, you know, pushed it off or made more money at harvest even. And in the example that we put together in the newsletter, you know, the example farm in that case was looking to sell in January. And so when you look at that, that being two months from now. So we can automatically assume that there’s going to be at least two months in storage.

00;07;32;15 – 00;07;56;00
Dr. Ryan Loy
And so what does that look like, you know, in terms of that price to receive? To break even on it, or at least to profits on it? And so again, if their breakeven for corn is about $5.10 a bushel and $11.50 per bushel for soybeans in this example, well, for two months, including the interest, we’re looking at $0.16 for corn and $0.26 per bushel on those storage costs.

00;07;56;00 – 00;08;31;24
Dr. Ryan Loy
In total over that time to get to January. In this example, though, one of the things I posed was even if there was a, you know, looking at an example, they have to reach, you know, $5.46 and $12.06 for their corn and soybeans to be profitable storing at that time. But in the one of the examples I posed here was, well, if it cost me $0.16 to store it per bushel, but there was only a 10% increase in the corn market during that time, well, I’ll lose on average $0.06 per bushel for just storing it because that price didn’t exceed the cost to store.

00;08;31;24 – 00;08;48;04
Dr. Ryan Loy
And so again, I appreciate you bringing that up, Scott, because it’s a very important lesson in terms of where do you expect the market to go, where it’s heading, and will it actually reach that point, or is, you know, tying up that capital and the storage, not the optimal way to go? Scott, I have one more question for you, because I know you’ve been following this very closely.

00;08;48;04 – 00;09;08;09
Dr. Ryan Loy
So how might current export developments that we’ve seen over the past week, two weeks, especially with, you know, China agreeing to buy U.S. soybeans again for this marketing year and the next two marketing years, committing to 12 million metric tons over the next two marketing years. So how, how can these changes and these soybean commitments influence the near-term pricing opportunities?

00;09;08;09 – 00;09;31;18
Mr. Scott Stiles
Yep. I think that in terms of how long you want to store, you have to have a market opinion. And some personal thoughts on outlook, and I think putting the markets in the current context. And you look at soybeans, soybeans have rallied a dollar a bushel off the October lows. And a lot of that’s been driven by, you know, the recent developments in the trade agreement with China.

00;09;31;18 – 00;09;50;15
Mr. Scott Stiles
Some of it may be, you know, maybe the trade thinks the U.S. yield is a little bit lower. We may see production dial back some. But the market’s moved, you know, a dollar already. And you have to insert that somewhere in your thinking about well the market’s kind of starting to stall and it’s already moved a dollar.

00;09;50;18 – 00;10;09;00
Mr. Scott Stiles
And so how much more upside is it realistically? And you have to work that into the discussion in terms of, you know, do I even want to store the crop or do I just want to take advantage of this dollar rally and liquidate the crop now? So the market’s moved a considerable amount and it’s the highest it’s been really in the last two years.

00;10;09;01 – 00;10;13;29
Mr. Scott Stiles
So we have to work those things into our thinking about storage.

00;10;14;01 – 00;10;35;17
Dr. Ryan Loy
Thank you Scott I really appreciate it. One of the things that I didn’t mention in the newsletter, maybe, you know, more so just for simplicity purposes, being a newsletter and trying to show this example as simply as I could, I didn’t talk about accounting for basis expectations. And Andy, I have a question for you. You know, when we’re looking at this, we’ve talked about a lot today and there’s a lot in this newsletter.

00;10;35;17 – 00;10;45;12
Dr. Ryan Loy
But what role do basis expectations play in these post-harvest marketing decisions, and how should farmers treat those seasonal trends alongside their storage cost calculations?

00;10;45;12 – 00;11;08;17
Dr. Andrew McKenzie
Yeah. Good questions. First to the point on basis. Really, you know, that’s the game that the commercials play, right? Where they’re in effects trying to profit from changes in the basis on the storage that they bought off of farmers. And for them, it’s a game that they are very used to playing, and they’re sort of hedging on both sides of the deal when they do it.

00;11;08;17 – 00;11;25;24
Dr. Andrew McKenzie
So when they buy the bushels off the farm, they’re getting into the futures and then they’re getting out, on the flip side, by selling the cash and getting out of the futures. And so it’s the relative movement on basis which dictates their profits. For the farmer, the basis, if it improves, can also help their bottom line too, no doubt about it.

00;11;25;25 – 00;11;54;14
Dr. Andrew McKenzie
But there’s no guarantee unless the farmer also plays the futures game and locks in the futures contract post harvest. Because just, you know, just accounting for what basis does, if the futures go down and they’re looking at the basis relative to that lower futures, they’re still going to get a lower price. So you know, unless they’re willing to sell futures for say, for March delivery and then hope the basis climbs up in that period, I’d be a little wary of just thinking about basis from the point of view of the farmer.

00;11;54;14 – 00;12;13;26
Dr. Andrew McKenzie
For me, thinking about it in the post-marketing window. And I agree 100%, by the way, with what Scott said as well. I think the market to some extent is maybe already, you know, impounded that information that we’re talking about on trade and stuff. So how much upside is, you know, somewhat debatable. And as well, you know, you thinking about it.

00;12;13;28 – 00;12;39;14
Dr. Andrew McKenzie
A lot of farmers like you said as well, both of you said, if you’re thinking about the financing aspect of it to store, the interest is a huge part of it. And the commercials do factor that in when they’re figuring out their costs on storage. So that’s a big part of it. What are you giving up by not selling today and putting the money in the bank and earning interest on it, or at least paying off a bill which you’re also paying interest on?

00;12;39;14 – 00;13;07;24
Dr. Andrew McKenzie
I would say the other thing you can do other than trying to, you know, project movements in basis to enhance your final sale. You can look to see what the elevator is in your area, offering on forwards for deferred periods post-harvest. So you can lock in on forward contracts, typically for January, February, March delivery. And the elevators will typically, if they see the futures have gone up, they’re going to adjust those forward bids up too.

00;13;07;24 – 00;13;35;00
Dr. Andrew McKenzie
So you can potentially just get rewarded for that and then compare those forward prices to your storage costs to get out there again. Or if you’re storing in a commercial, how much are they charging you versus what forward prices you could lock in at? So that’s one thing that you might look at. I mean, I looked at some today and, you know, there’s maybe a ten cent premium from prices today to get it out to January or February on some forward pricing in Memphis area.

00;13;35;00 – 00;13;53;24
Dr. Andrew McKenzie
I was looking at, but again, probably not enough to cover your storage costs to get out there. Right. The other thing you can do with an elevator, if you’re interested in trying to sort of stay in the market, and this is something I talk about in my book, which is Physical Grain Trading Book, which I just wrote with, with a futures broker and a guy who’s, a CEO of a commercial.

00;13;53;27 – 00;14;10;15
Dr. Andrew McKenzie
And if anybody’s interested in that, they can look on the Fryar website and we’ve got links to where you could buy that. But moving away from, sort of self-serving myself to promote my book, some of these ideas are discussed in this, and one of them is you can get into what’s called a minimum price contract with an elevator.

00;14;10;15 – 00;14;33;00
Dr. Andrew McKenzie
So what that entails is, at harvest delivery time, you give up the bushels to the elevator, he will give you his current board price less a fee for this minimum price contract. The fee is really, although the farmer won’t see it, is the cost for the elevator to buy call options. And so they’re covering themselves on, in effect, taking out a call option for the farmer.

00;14;33;00 – 00;15;04;06
Dr. Andrew McKenzie
But what it allows the farmer to do is he’ll get guaranteed this minimum price. The elevators current price less the fee for the call option. And if futures actually increase, in the post harvest period this contract is tied to say, for corn like March futures or something like that. And if the price on March futures climbs up, the farmer can get the increase over today’s March futures versus where it ends up in the post-harvest period, the increase will then be tacked on to that minimum price that they receive.

00;15;04;08 – 00;15;21;21
Dr. Andrew McKenzie
So it’s a way of staying in the market to try to benefit from potentially higher prices, but still giving you a guarantee that at least you get some sort of minimum price based off of today. And also typically these contracts will pay out most of the money today. And so again, it’s you’re not losing the interest on it then as well.

00;15;21;21 – 00;15;40;12
Dr. Andrew McKenzie
Alternatively, if you want to do it yourself, and you feel more savvy as a farmer, you could just buy call options if you want to stay in the market yourself. And like we were saying, Scott, if the market does get any higher from what it currently has already adjusted to, then if you buy a call up, you potentially you’ll make money when the price goes up.

00;15;40;12 – 00;16;00;06
Dr. Andrew McKenzie
You have to know a little bit about how calls work, but the idea is calls will pay out if the futures goes up. And so you know that in that strategy you’re sort of getting rid of your physical bushels. You no longer have to worry about storage costs and all that. But if you want to play the gamble of wanting to still have the potential for higher prices, you get the call.

00;16;00;06 – 00;16;19;20
Dr. Andrew McKenzie
Now the call as well, it’s an upfront fee to buy call auction. So you know upfront what it’s going to cost you. That’s the stake money that you’re paying to take this gamble. The most you ever lose on the call is that initial price or premium you pay for it. So if it doesn’t work out, the prices don’t go high enough to yield you profit.

00;16;19;22 – 00;16;39;15
Dr. Andrew McKenzie
You know how much you’re out because you try to do this. Now, I would caveat on it if you look historically, these things often don’t work out. So you buy the call option and you still don’t get to use the suckers. But if the market really rallies a lot, then it can actually play out that you stayed in the game and could take advantage of that.

00;16;39;16 – 00;16;59;09
Mr. Scott Stiles
I was going to say you can weigh the cost of the option against the cost of storage. So like for example, if you’re looking at a March at the money call, which would be the the $11.40, March call today, it cost $0.38. And that gives you a chance to participate in any upside in the market for the next hundred and seven days.

00;16;59;09 – 00;17;22;13
Mr. Scott Stiles
And that option expires February 20th. So you could just compare the cost of that 38 cent option premium against what it would cost at a store out to February 20th. And if you believe, you know, there’s some upside in the market. Say, maybe the US crop size is going to be a little bit smaller, maybe there’s, you know, maybe drought does eventually develop in Argentina and southern Brazil.

00;17;22;13 – 00;17;43;14
Mr. Scott Stiles
And we get a little bit of a weather rally, you know, over the next you know, a couple of months. So, you know, if you have, you know, opinions that that may be you know, where we’re headed. You could see the value of this call option appreciate some. But, you know, it’s just another alternative. You could you could just sell your grain in storage and take all your downside risk off the table.

00;17;43;14 – 00;17;56;00
Mr. Scott Stiles
But if you thought there was some upside, just go, you know, and buy the call option. And that allows you to benefit from any upside for a limited time through in this case, through the 20th of February, if you bought a March call.

00;17;56;03 – 00;18;17;22
Dr. Andrew McKenzie
Yeah I agree Scott 100%. That’s exactly right. And I think my point would be though as well, is whether you want to do this yourself and take on the option part yourself or pay a fee in effect to have the elevator do that is for you through a minimum price contract. They basically both do the same thing, except you’re paying a fee for the elevator to manage the option for you through the minimum price contract.

00;18;17;22 – 00;18;34;19
Dr. Andrew McKenzie
And I would say that if you do decide to do the options yourself, and you could speak to this too, Scott, but it’s sort of a little bit easier, right? To trade options or use options and futures because you don’t have a margin account you have to do as long as you’re buying these options. So you do have to worry about margin calls and all those other things.

00;18;34;19 – 00;18;52;09
Dr. Ryan Loy
Gentlemen, this has been great. I mean, seriously, y’all are both a treasure trove of information when it comes to marketing, and I’m just lucky to be part of this conversation, really. I think we touched on a lot of very important things, all things that we should revisit before production meeting season this year, because I think that all that’s going to be extremely helpful, for the farmers moving forward.

00;18;52;09 – 00;19;13;09
Dr. Ryan Loy
Again, I really can’t thank you all enough for donating your time today to come and speak with me and be part of our podcast. As Dr. McKenzie had mentioned, he does have a new book out that details a lot of this stuff. If you’re interested in, I will link it in the newsletter this week, but it’s also available where we host the podcast because, we have Dr. McKenzie and his center to thank for us being able to have this podcast.

00;19;13;09 – 00;19;25;00
Dr. Ryan Loy
And so we host it there. And so it’s right there on the front. If you go and are looking at our newsletters and podcasts, you can go there and there’s a link. I would venture to guess that Dr. McKenzie would be happy to take any questions you may have on it. If you are interested in it.

00;19;25;00 – 00;19;27;00
Dr. Andrew McKenzie
Yeah. Thanks for promoting me, Ryan.

00;19;27;02 – 00;19;34;29
Dr. Ryan Loy
Of course, of course. Thank you for being a part of this and for always supporting our efforts in everything. Well, gentlemen, is there anything else you’d like to say before we wrap this up?

00;19;35;01 – 00;20;06;11
Dr. Andrew McKenzie
One last thought for me would just be, you know, taking aside this particular marketing year and just thinking in the more broader general picture, I would still be a huge advocate for farmers to try to, if they can proactively sell in the pre harvest window. My experience has been if you look, typically the highest prices you can get are like spring through summer, and if you’re willing to try to bite the bullet and take those prices then by forward contracting with your elevator during that period.

00;20;06;16 – 00;20;22;20
Dr. Andrew McKenzie
Having already gone and talked today about the fact that if you store, you’ve got all these problems like storage costs to take into account, which eats away any price increase you may achieve. I still believe the pre harvest window is the time to optimally usually do this.

00;20;22;20 – 00;20;42;00
Dr. Ryan Loy
Absolutely I would I would 100% echo that. Absolutely. And we and in addition to the book that we’ll link, we’ll also link Dr. McKenzie and I’s fact sheet on pre harvest marketing and how that can be utilized. And again I definitely agree with that sentiment. Well gentlemen if there’s no other thoughts again I just want to thank you all for your time and we’ll wrap this episode up.

00;20;42;00 – 00;21;08;28
Dr. Ryan Loy
This has been great. Stay tuned for the market report. Bye bye now. Good morning everyone. This is Ryan with your market report December 2025 Corn is currently priced in at $4.29 per bushel. That’s up 2% from a month ago and up 1% from a year ago. January 2026 rice is currently priced in at $10.30 per hundredweight. That’s down 9% on the month and down 29% on the year January 2026

00;21;08;28 – 00;21;37;18
Dr. Ryan Loy
Soybeans are currently pricing in at $11.08 per bushel. That’s up 7% on the month and up 10% on the year. December 2025. Cotton is currently pricing in about $0.65 per pound. That’s down 1% on the month and down 7% on the year. July 2026 Wheat is currently pricing in at $5.69 per bushel. That’s up 3% on the month, but down 6% on the year due to the government shutdown.

00;21;37;18 – 00;22;06;01
Dr. Ryan Loy
And weekly reporting of peanut prices by the USDA has been temporarily suspended. Mississippi River level at Memphis is currently reading at -4.01ft, a year ago, -10.12ft. Arkansas Highway Diesel is currently pricing in at $3.39 per gallon. A month ago, that was $3.35 per gallon, and a year ago, $3.24 a gallon. Arkansas Farm diesel is currently pricing in at about $2.70 per gallon.

00;22;06;01 – 00;22;37;09
Dr. Ryan Loy
A month ago, that was $2.44 a gallon, and a year ago, $2.49 a gallon. Switching to fertilizer and looking at urea. Urea is currently pricing in at about $520 a ton. A month ago, that was $558 a ton, three months ago it was $570 a ton. Ammonium nitrate currently pricing in at $425 a ton. A month ago, that was $450 a ton in three months ago, $435 a ton.

00;22;37;09 – 00;23;05;00
Dr. Ryan Loy
Ammonium sulfate currently pricing in at $448 a ton. Month ago, that was $522 a ton, and three months ago $540 a ton. DAP is currently pricing in at $902 a ton a month ago, $951 a ton, and three months ago $855 a ton. That has gone up significantly. Triple super Phosphate is currently pricing in at $787 a ton.

00;23;05;00 – 00;23;27;15
Dr. Ryan Loy
A month ago, that was $835 a ton, and three months ago, $765 a ton. And finally, potash is currently priced in at $445 a ton. A month ago, that was $471 a ton. And three months ago was $463 a ton. Thank you all so much for tuning in this week. Have a good one!