5 Marketing Questions to Ask Yourself This Fall

Usually, late November is a busy time for farmer meetings and webinars. This is also a time for farmers to consider making cash and new crop sales. The crop is in the bin, and for many farmers it is an important time to meet with lenders, agronomists, and marketing advisers, and begin to put the numbers together for this year and to make plans and budgets for the next crop season. 

Let’s look at alternatives and strategies to use for the 2024 crops you need to sell. I cannot make one master plan for every farm, since everyone’s breakeven, storage, and debt level are different. 

However, here are some of the key questions you need to ask before you map out your plan:

Question #1. Do the current cash price and crop insurance indemnity payments you have or will receive allow you to sell your grain at a profit?

Hopefully, the answer is “yes.” For many of you, the answer this year is “no.” That is why you need to be creative and look at all of your alternatives.

Question #2. Where is your crop stored?

Is your crop in commercial storage and do you have an operating note at the bank? The combination of monthly commercial grain storage and interest cost can offset any rally in the grain markets. You may have better and lower risk grain marketing alternatives than keeping your grain in commercial storage.

Question #3. What is your local basis?

Usually, once the corn and soybean crops are put away, basis levels start to improve. The odds are good that since harvest, your corn basis and soybean basis have improved by 10¢ to 30¢ per bushel.

Question #4. What are the current spreads to the March, May, and July contracts?

Prior to harvest, the market was offering a great return on storing your crops for the next three to six months if the crops were in your own bin. Watch these spreads.

Question #5. What is the trend in the grain markets?

The grain markets appear to have put in major lows in the fall of 2024. It is difficult to store your way back to a profit level, but holding some of the crop should pay off into the spring and summer of 2025.

Three Alternatives 

Now that you have thought about these five important questions, let’s look at three alternatives you can consider, depending on your situation.

Alternative #1

If your grain is in commercial storage and you have an operating note, then it will take a huge rally in the grain markets to store your way back to a good profit level. 

I am optimistic about prices into 2025 but I have to be realistic as well. Consider selling 50% to 100% of your crop and replacing that sale with the purchase of July call options.  

If you have not used options before, then I understand the reluctance to do this on 100% of your crop. But give it a try on a small scale. Even if you do this on two or three contracts of corn and one to two contracts of soybeans, it stops the storage on those bushels and allows you to pay off a lot of debt. You also gain experience with options. 

I am not 100% sure prices will rally next year, but I am 100% sure that every dollar you can save on commercial storage and interest at the bank is real savings for your farm.

Alternative #2

If the grain is in your own storage, you still have to manage your basis and futures risk. In many areas of the western Corn Belt, I anticipate a positive basis by early next year. Processors and exporters will be forced to compete for the smaller crop. If you can negotiate a positive basis, then take it. Make the cash sale and maintain ownership with call options.  

If you are in an area where the basis is wide and is not improving much after harvest, then you need to focus on making seasonal cash sales between April and July.

Alternative #3

Usually, “hold and hope” is not a good long-term plan. However, if you are in a good cash position and the grain is in your own storage, then you may be able to store until the basis improves and the futures put in the normal seasonal rally into next summer. A word of caution: If you decide just to hold on to inventory in the bin, make sure you have a disciplined, written price and time plan to get the corn and soybeans sold.  

What is ahead? I do not know. How will the weather and grain markets unfold in the coming growing season? For now, I expect a pattern similar to last year’s. I will update my expectations and price projections when I get the seasonal weather forecasts in late February and early March. My preliminary plan is to make cash sales between April and early June. The farmers who sold cash and new-crop corn when they were planting in 2024 had great results; I think they will again in 2025.

Note: The risk of loss in trading futures and/or options is substantial, and each investor and/or trader must consider whether this is a suitable investment. Past performance — whether actual or indicated by simulated historical tests of strategies — is not indicative of future results. Trading advice reflects good-faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice given will result in profitable trades.