Will A Post-Harvest Date-Driven Marketing Plan Improve Your Corn Revenue?

loading a grain truck

Will A Post-Harvest Date-Driven Marketing Plan Improve Your Corn Revenue? January 24, 2019

When developing a grain marketing plan, it is easy to become overwhelmed by the numerous combinations of price targets, possible sale dates, and contracts available. In this article, I am going to review marketing outcomes from a date-driven marketing plan using historical prices.

To create a date-driven plan, simply divide your un-priced grain into smaller units and select a specific day each month to sell to the local elevator at that day’s cash price. The question is: Will this date-driven plan improve the average price you receive per bushel when post-harvest marketing corn?

This article will evaluate various date-driven post-harvest marketing strategies for corn using historical cash prices from Columbus, Nebraska. The data was collected weekly on Thursdays from the USDA Marketing Service and are available from October 1997 to present.

Five separate date-driven post-harvest corn marketing strategies are summarized in Table 1. Each of the strategies in Table 1 begin in October with sales over 2, 4, 6, 8 or 10 months. These strategies are compared to the harvest price by average price obtained over the 20-year period and the probability of the average price of a strategy being higher than the cash price at harvest.

The cost of storage was not included in this analysis as storage costs vary greatly among farms, depending on the size, age, and condition of the bin and the individual farmer’s operating note interest expense.

Table 1. Post-Harvest Cash Marketing Strategies for Columbus, Nebr.
Harvest
Price
2-Month
(OCT-NOV)
4-Month
(OCT-JAN)
6-Month
(OCT-MAR)
8-Month
(OCT-MAY)
10-Month
(OCT-JUL)
1997-98 $2.58 $2.52 $2.42 $2.43 $2.39 $2.32
1998-99 $1.76 $1.84 $1.85 $1.86 $1.87 $1.84
1999-00 $1.59 $1.63 $1.67 $1.74 $1.81 $1.79
2000-01 $1.87 $1.88 $1.91 $1.89 $1.86 $1.85
2001-02 $1.91 $1.86 $1.88 $1.87 $1.85 $1.87
2002-03 $2.43 $2.39 $2.35 $2.33 $2.33 $2.31
2003-04 $2.02 $2.12 $2.21 $2.36 $2.48 $2.49
2004-05 $1.78 $1.70 $1.68 $1.71 $1.72 $1.76
2005-06 $1.49 $1.53 $1.60 $1.68 $1.74 $1.80
2006-07 $2.60 $2.90 $3.09 $3.30 $3.30 $3.39
2007-08 $3.00 $3.32 $3.75 $4.18 $4.56 $4.95
2008-09 $4.13 $3.82 $3.61 $3.56 $3.61 $3.58
2009-10 $3.28 $3.40 $3.38 $3.37 $3.36 $3.34
2010-11 $5.06 $5.08 $5.34 $5.71 $5.99 $6.25
2011-12 $6.02 $6.14 $5.99 $6.06 $6.05 $6.20
2012-13 $7.68 $7.57 $7.34 $7.29 $7.17 $7.14
2013-14 $4.45 $4.27 $4.12 $4.16 $4.29 $4.22
2014-15 $2.99 $3.22 $3.40 $3.47 $3.50 $3.53
2015-16 $3.56 $3.44 $3.40 $3.36 $3.37 $3.39
2016-17 $3.03 $3.03 $3.06 $3.11 $3.17 $3.22
Average Price $3.16 $3.18 $3.20 $3.27 $3.32 $3.36
Probability   55% 55% 60% 55% 55%

The Harvest Price column shows outcomes of selling 100% of corn across the scale the first Thursday of October for each year. The remaining strategies in Table 1 divided unpriced bushels into equal amounts and sold them the first Thursday of each month listed in the heading. For example, in the two-month strategy (OCT-NOV) 50% of bushels were sold the first Thursday in October and the remaining 50% of the bushels were sold on the first Thursday in November.  All of these strategies resulted in a higher average price over 20 years than if all of the bushels had been sold at harvest each year. Furthermore, all of the date-driven marketing strategies had a 55% or greater probability of occurring. This indicates that date-driven post-harvest marketing strategies may improve corn revenue.

Additional strategies were evaluated, and those strategies that had a probability of beating the harvest price greater than or equal to 60% or a 20-year average price greater than $3.50 per bushel are shown in Table 2.  Average prices and probability of beating the harvest price are increased when the sales took place in the spring. The strategies with the highest probability of beating the harvest price are March-April (two-month), March-August (six-month), and January-August (eight-month). Three strategies, May-Jun, Jun-Jul, and Apr-Jun had a 20-year average price greater than or equal to $3.50 per bushel.

It is important to note that the harvest price was the highest 3 out of 20 years (1997-98, 2002-03, 2012-13).

If an individual estimated their storage cost per bushel per month for each marketing year and included it in the analysis, it would show a lower average return for marketing plans where corn was stored for several months, maybe even eliminating the gain in revenue over the harvest price.

This analysis shows that a date-driven post-harvest marketing strategy may improve the average price that you receive for corn, if the strategy is executed in the spring. Farmers must be aware of the cost of storage, as it will reduce or eliminate the gains in price they receive by storing corn to market later in the year.

A farmer must assess their personal risk and determine what combination of price targets, possible sale dates, and marketing contracts work best for their operation. Past performance is not necessarily indicative of future results. Grain marketing involves risk, and you should fully understand those risks before pricing grain.

Table 2. Post-Harvest Cash Marketing Strategies for Columbus, Nebr.
  2-Month4-Month6-Month8-Month
Harvest PriceMARCH–APRILAPRIL–MAYMAY–JUNJUN–JULJUL–AUGNOV–FEBJAN–APRFEB–MAYAPR–JULMAY–AUGNOV–APRFEB–JULMAR–AUGJAN –AUG
1997-98 $2.58 $2.38 $2.25 $2.15 $2.05 $1.87 $2.39 $2.38 $2.35 $2.15 $2.01 $2.39 $2.25 $2.13 $2.20
1998-99 $1.76 $1.86 $1.89 $1.91 $1.71 $1.56 $1.89 $1.88 $1.89 $1.80 $1.74 $1.88 $1.83 $1.78 $1.81
1999-00 $1.59 $1.92 $2.00 $2.00 $1.74 $1.48 $1.75 $1.90 $1.95 $1.87 $1.74 $1.81 $1.88 $1.80 $1.82
2000-01 $1.87 $1.88 $1.76 $1.66 $1.82 $1.92 $1.90 $1.89 $1.81 $1.79 $1.79 $1.90 $1.81 $1.82 $1.84
2001-02 $1.91 $1.81 $1.80 $1.86 $1.92 $2.10 $1.88 $1.85 $1.83 $1.86 $1.98 $1.85 $1.86 $1.92 $1.91
2002-03 $2.43 $2.30 $2.34 $2.35 $2.23 $2.09 $2.32 $2.32 $2.32 $2.29 $2.22 $2.31 $2.29 $2.24 $2.27
2003-04 $2.02 $2.86 $2.86 $2.67 $2.50 $2.21 $2.36 $2.66 $2.75 $2.68 $2.44 $2.53 $2.67 $2.58 $2.55
2004-05 $1.78 $1.79 $1.75 $1.77 $1.91 $1.90 $1.67 $1.76 $1.76 $1.83 $1.83 $1.71 $1.81 $1.82 $1.80
2005-06 $1.49 $1.87 $1.93 $1.94 $2.03 $2.04 $1.70 $1.86 $1.88 $1.98 $1.99 $1.76 $1.93 $1.95 $1.93
2006-07 $2.60 $3.53 $3.33 $3.70 $3.73 $3.28 $3.36 $3.53 $3.52 $3.53 $3.49 $3.42 $3.59 $3.50 $3.51
2007-08 $3.00 $5.41 $5.71 $6.29 $6.50 $5.76 $4.21 $5.03 $5.38 $6.10 $6.02 $4.61 $5.75 $5.82 $5.52
2008-09 $4.13 $3.58 $3.78 $3.97 $3.47 $2.93 $3.42 $3.56 $3.62 $3.62 $3.45 $3.47 $3.57 $3.49 $3.50
2009-10 $3.28 $3.29 $3.31 $3.26 $3.26 $3.42 $3.39 $3.32 $3.33 $3.29 $3.34 $3.36 $3.31 $3.32 $3.33
2010-11 $5.06 $6.74 $6.83 $7.07 $7.30 $7.04 $5.72 $6.50 $6.65 $7.07 $7.05 $6.06 $6.86 $6.95 $6.78
2011-12 $6.02 $6.20 $6.05 $6.05 $6.80 $7.81 $6.03 $6.12 $6.12 $6.42 $6.93 $6.09 $6.35 $6.69 $6.52
2012-13 $7.68 $7.02 $6.83 $6.97 $7.02 $6.51 $7.17 $7.03 $7.01 $6.93 $6.74 $7.12 $7.02 $6.83 $6.88
2013-14 $4.45 $4.49 $4.69 $4.50 $3.94 $3.50 $4.04 $4.24 $4.46 $4.31 $4.00 $4.19 $4.29 $4.16 $4.12
2014-15 $2.99 $3.63 $3.59 $3.49 $3.65 $3.65 $3.54 $3.60 $3.60 $3.62 $3.57 $3.57 $3.62 $3.59 $3.59
2015-16 $3.56 $3.31 $3.39 $3.61 $3.50 $3.01 $3.33 $3.29 $3.33 $3.45 $3.31 $3.32 $3.39 $3.31 $3.30
2016-17 $3.03 $3.24 $3.35 $3.42 $3.41 $3.29 $3.12 $3.23 $3.27 $3.38 $3.36 $3.16 $3.32 $3.32 $3.29
Average Price $3.16

$3.46

$3.47

$3.53

$3.52

$3.37 $3.26 $3.40 $3.44 $3.50 $3.45 $3.33 $3.47 $3.45 $3.42
Probability   70% 60% 60% 55% 60% 60% 60% 60% 60% 60% 60% 60% 65% 65%