Harvest has come to a close in the Midwest, with corn being sold off the combine and stored in farmer bins. As year-end bills approach, farmers face the decision of whether to sell corn from the bin or hold onto it. Over the past month, corn futures prices have been relatively stable within a 20¢ range, supported by strong ethanol and export demand but constrained by the large carryout.

From a Marketing Perspective

With the end of the year in sight, farmers are now concentrating on their finances and planning for the 2025 crop year. The question remains: will corn prices break out of the modest trading range? Some farmers may be tempted to sell corn to pay their bills, while others hope for higher prices due to potential weather issues in South America. Here are three strategies to consider:

1. Basis Contract

If you plan to store corn at home, pay attention to your local basis levels. In some Midwest locations, the basis may be attractive as grain elevators try to secure as much corn as possible. Consider entering into a cash basis contract to protect the local basis level. By doing so, you commit to delivering a set number of bushels to the elevator with the basis locked in. However, the grain is not fully priced yet, and you need to determine the right time to finalize the contract based on your target futures price. Make sure to inquire about any associated fees.

For example, in a particular Midwest location, the basis might be 10¢ above the futures price. By entering into a basis contract, you can ensure that you receive a fair price when you sell the corn. This strategy provides stability and protection against price fluctuations.

2. Buy a Put Option

If you don't want to make a cash sale but still want to protect the current value of your corn, buying a put option is a viable option. A put option gives you a price floor, protecting the value of your corn futures prices.

For instance, March 2025 put options expire on Feb. 21, 2025, providing enough time to navigate through the holidays, the January USDA report, and any weather-related uncertainties in South America. One put option covers 5,000 bushels, and the cost varies between 10¢–20¢ per contract, depending on the strike price. This allows you to have peace of mind knowing that your grain is protected.

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

If you make a cash sale but worry about missing out on higher prices, buying a call option can be a solution. A call option allows you to participate in any upward price movement even after the grain has left your farm.

For example, March 2025 call options also expire on Feb. 21, 2025. One call option covers 5,000 bushels, and the cost varies between 10¢–20¢ per bushel, depending on the strike price and month. This gives you the flexibility to benefit from future price increases while still having the option to sell the corn at a later date.

The market volatility in the coming weeks and months is likely to be significant due to weather uncertainties and geopolitical factors. It's crucial to be strategic in your marketing decisions. Incorporating these strategies can help you navigate the market and make informed choices.

If you have any questions, you can reach Naomi at naomi@totalfarmmarketing.com or visit TotalFarmMarketing.com.

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