📚 THE COMPLETE GRAIN MARKETING GUIDE
A comprehensive resource for Upper Midwest grain farmers. Research-backed education on marketing, risk management, and farm economics.
📑 TABLE OF CONTENTS
CH 1 Mastering Basis — The Local Price Component
Basis is one of the most important concepts in grain marketing. Understanding basis can improve returns by 15-30 cents per bushel.
What Is Basis?
Basis is the difference between your local cash price and the futures price:
December corn futures = $4.50. Local elevator bid = $4.25.
Why Basis Matters
Basis can swing your final price by 20-50 cents per bushel. On a 500-acre farm at 190 bu/ac, a 20¢ basis difference = $19,000.
What Affects Basis?
- Location & Transportation: Distance to terminals, ethanol plants
- Local Supply & Demand: New ethanol plant = stronger basis
- Time of Year: Weakest at harvest, strongest in summer
- Storage Availability: Full bins = wider basis
- Quality: Discounts for moisture, damage
Basis patterns are more predictable than futures prices. This makes basis-based strategies more reliable.
CH 2 Futures Markets 101
Futures markets provide price discovery and risk transfer. For farmers, futures provide a way to lock in prices before harvest.
CME Grain Futures Specs
| Contract | Symbol | Size | Tick Value |
|---|---|---|---|
| Corn | ZC | 5,000 bu | $12.50 |
| Soybeans | ZS | 5,000 bu | $12.50 |
| Wheat | ZW | 5,000 bu | $12.50 |
Contract Months
Corn: Mar, May, Jul, Sep, Dec — Use December for new-crop.
Soybeans: Jan, Mar, May, Jul, Aug, Sep, Nov — Use November for new-crop.
CH 3 Grain Contract Types
Most farmers use elevator contracts rather than trading futures directly.
The 6 Common Contract Types
| Contract | Locks | Best For |
|---|---|---|
| Cash Sale | Everything | Immediate certainty |
| Forward | Futures + Basis | Complete price protection |
| Basis Contract | Basis only | Strong basis, uncertain futures |
| HTA | Futures only | Good futures, weak basis |
| Delayed Price | Nothing | Need to move grain |
| Minimum Price | Floor only | Protection + upside |
Never forward contract more than 50-70% of conservative yield estimates.
CH 4 When to Sell — Seasonal Patterns
Nine years out of ten, corn prices bottom during fall harvest.
The Seasonal Price Cycle
| Period | Tendency |
|---|---|
| Jan-Feb | Stable; S.A. weather focus |
| Mar-Apr | Strengthening — "buying acres" |
| May-Jun | Weather premium building |
| Late Jun-Jul | SEASONAL HIGH |
| Aug-Sep | Declining as crop clears |
| Oct-Nov | SEASONAL LOW |
Have stored grain and pre-harvest marketing completed by July 4th.
CH 5 Storage Economics
Storage is a marketing tool, not a guarantee of higher prices.
True Cost of Storage
Reading the "Carry" Signal
CH 6 Reading USDA Reports
USDA reports are the single biggest market movers.
The Big Five Reports
| Report | When | Impact |
|---|---|---|
| WASDE | Monthly | HIGHEST |
| Prospective Plantings | Late March | HIGHEST |
| Acreage | Late June | HIGH |
| Grain Stocks | Quarterly | HIGH |
| Crop Progress | Weekly | MODERATE |
CH 7 Crop Insurance — YP vs RP
Revenue Protection (RP) is used on over 90% of insured acres.
YP vs RP Comparison
| Feature | Yield Protection | Revenue Protection |
|---|---|---|
| Protects | Bushels only | Revenue (yield × price) |
| Price Used | Projected only | Higher of projected OR harvest |
| Premium | Lower | Higher (10-15% more) |
| Price Protection | None | Yes |
Revenue Protection at 80% coverage is the standard recommendation for most grain farmers.
CH 8 Hedging Strategies
Hedging is about reducing risk, not maximizing profit.
Three Hedging Tools
| Tool | Floor | Upside |
|---|---|---|
| Short Futures | Yes | No (gives up all) |
| Put Options | Yes | Yes (unlimited) |
| Fence/Collar | Yes | Limited (cap) |
Most farmers achieve similar results through elevator contracts (forward, HTA, basis) without margin accounts.
CH 9 Break-Even Analysis
You can't market profitably if you don't know your costs.
Typical Corn Costs (2025)
CH 10 Growing Degree Units
Corn development is driven by heat, not calendar days.
Corn Growth Stages
| Stage | GDUs |
|---|---|
| Emergence | 100-120 |
| V6 (6 leaves) | 475-500 |
| Silking | 1,200-1,350 |
| Black Layer | 2,500-2,800 |
You now have a solid foundation in grain marketing fundamentals.