3 Corn Pricing Strategies to Consider

What’s Happened

Harvest has wrapped up for most of the Midwest. Corn that needed to be sold off the combine at harvest has come to town to be sold. The remaining harvested bushels are now secure in farmer bins at home.

With year-end bills such as land rent, fertilizer costs, and seed purchases likely due soon, farmers may be considering whether they should sell some corn from the bin in the near future.

Over the past month, corn futures prices have traded in a relatively lackluster 20-cent range. The market remains well supported by strong ethanol and export demand. Yet, the reality of 1.9 billion bushel carryout keeps a lid on market prices for now.

From a Marketing Perspective

With year end in sight, farmers are now focused on finances and are planning for the 2025 crop year. Will corn prices ever move out of the modest 20-cent trading range? If there is little reason for corn prices to rally, does one just sell corn in the bin and “be done with it” to get bills paid? Or does one store corn at home in bins and hope for bad weather in South America in the coming months to spur U.S. prices higher? 

Are you sure what to do with your corn in the coming weeks? Here are three simple ideas to consider:

1. Basis Contract:

If you plan to store corn in your bin at home, be mindful of your local basis levels. In some Midwest locations, basis may currently be attractive as some grain elevators may want to try to secure as much corn as possible, especially as corn is still relatively on the historically “cheap” side. 

Consider looking into cash basis contracts to protect what may be an attractive local basis level. If you commit to this strategy, know that you are required to deliver a set number of bushels to your elevator with the basis locked in. However, the grain is still not fully priced. It is your responsibility to do a final pricing of the contract when you feel the futures price is at your target price (essentially when you feel the corn futures price will ultimately work higher). Make sure you ask your elevator what fees may be associated with this strategy.

2. Buy a Put Option

Are you not interested in making cash sales at this time, yet want to protect current value “just in case” of black swans, larger carryout on the next USDA report, or geo-political volatility in the weeks ahead that might sink prices? 

Buying a put option (no margin calls) allows you to give yourself a price floor to protect the current value of corn futures prices.

March 2025 put options expire on February 21, 2025, and cover enough time to get through the holidays, the big January USDA report, any wild weather in South America, and even the February USDA report. 

One put protects 5,000 bushels, and the cost varies between 10 to 20 cents per contract (plus commission and fees) depending on the strike price incorporated.

For the grain you plan to store in bins at home, this may be an attractive way to have peaceful sleep at night knowing the value of your grain is protected with a price floor.

3. Make the Cash Sale and Re-Own with a Call Option

If you make that cash sale, but then fear missing out on higher prices, consider buying a call option. Buying a call (no margin calls) allows you — on paper — to be able to participate in any further upward price action even though the grain has left your farm.

One call covers 5,000 bushels, and the cost varies between 10 to 20 cents per bushel (plus commission and fees) depending on the strike price and month incorporated. March 2025 call options also expire on February 21, 2025.

Prepare Yourself

The market volatility that will likely continue to unfold in the coming weeks and months may be extreme with weather-watching and geo-political uncertainty stemming from around the world.

There is no way to outguess what the market will do, or how prices will respond to any of the above events. You must be strategic with your marketing. Incorporating the above strategies can be of assistance.

If you have questions, you can reach Naomi at [email protected] or visit TotalFarmMarketing.com.

Disclaimer: The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.