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Lessons Learned

Hurricane Katrina has impacted our area in multiple ways. Most people are complaining about high fuel prices right now, but to the area grain producers, the high price of fuel is just the beginning of their problems.

With the large amount of carryover in the corn market and extremely low river levels, harvest prices were already looking grim. With Katrina’s massive impact on the river transportation system, the cash market crumbled within a matter of hours following the storm.

Many local producers are scrambling to find storage while others are just taking the brunt of the low prices and are hoping that LDPs will help cover their losses.

The bottom line is: have a plan. All producers should be taking a note of what has happened within the past few weeks. Even though you may have made up your mind that due to inadequate amounts of moisture throughout the Eastern Corn Belt, the price of corn would for sure skyrocket to $3.00 this harvest– it didn’t happen. Depending on the harvest market is like riding a wave– you never know when it will reach its breaking point– crashing and taking your hopes of a profit along with it.

All I can say is that I hope that we all can learn from these tough circumstances. Situations like this illustrate the importance of locking in a profitable price whenever that opportunity presents itself. Forward contracting allows you to do that 365 days a year.

Remember, it is the small improvements that can make all the difference.