1. Agricultural Marketing
ECON 337:
Agricultural Marketing
Lee Schulz
Assistant Professor
Chad Hart
Associate Professor 1

2. Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Friday of the month

3. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

4. Basis
Basis
2000
-0.42
2001
-0.40
2002
-0.25
2003
-0.26
2004
-0.34
2005
-0.56
2006
-0.46
2007
-0.49
2008
2009
2010
-0.59
2011
-0.30
2012
-0.09
2013
-0.03
2014
-0.38
Harvest basis from December corn futures for average cash prices for Iowa corn on the 2nd Friday of October, in $/bushel.

5. Marketing Types Harvest Averaging Price Target Time and Price
Extended Time and Price

6. Marketing Types Harvest
Takes the harvest price for 100% of their grain

7. Average Price Captured
Harvest
2000
1.66
2001
1.69
2002
2.29
2003
1.88
2004
1.73
2005
1.48
2006
2.69
2007
3.02
2008
3.69
2009
3.47
2010
5.04
2011
6.10
2012
7.42
2013
4.30
2014
2.96
Average
3.29
Min
Max

8. Marketing Types Averaging
Sells 10% of their grain via futures each month January-July
Sells the remaining 30% at harvest
Sets basis at harvest

9. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

10. Average Price Captured
Harvest
Averaging
2000
1.66
1.91
2001
1.69
1.87
2002
2.29
2.11
2003
1.88
2.05
2004
1.73
2.24
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
2008
3.69
5.13
2009
3.47
3.77
2010
5.04
3.84
2011
6.10
6.02
2012
7.42
6.17
2013
4.30
5.08
2014
2.96
3.85
Average
3.29
3.42
Min
Max

11. Marketing Types Price Target
Sells 25% of grain via futures when futures price > production cost
Sells 25% when futures > costs + $0.25
Sells 25% when futures > costs + $0.50
Sells remaining 25% at harvest
Sets basis at harvest
Defaults to harvest sales when price objectives are not reached
Will start selling in the November before planting

12. Costs of Production Cost Cost + 0.25 Cost + 0.50 2000 2.43 2.68 2.93
2001
2.56
2.81
3.06
2002
2.55
2.80
3.05
2003
2.42
2.67
2.92
2004
2.58
2.83
3.08
2005
2.79
3.04
3.29
2006
2.86
3.11
3.36
2007
3.54
2008
3.63
3.88
4.13
2009
4.43
4.68
4.93
2010
3.48
3.73
3.98
2011
3.99
4.24
4.49
2012
4.40
4.65
4.90
2013
4.46
4.71
4.96
2014
Source: Iowa State University Extension, Dr. Michael Duffy

13. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

14. Average Price Captured
Harvest
Averaging
Price Target
2000
1.66
1.91
1.76
2001
1.69
1.87
2002
2.29
2.11
2.31
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
3.11
2008
3.69
5.13
4.16
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
2011
6.10
6.02
5.25
2012
7.42
6.17
5.97
2013
4.30
5.08
5.63
2014
2.96
3.85
4.00
Average
3.29
3.42
3.33
Min
Max

15. Marketing Types Time and Price Sell 25% in March Sell 25% in April
Sell 25% in May
Sell 25% at harvest
Sets basis at harvest
Only make March-May sales if futures prices > production costs
Defaults to harvest sales if price objectives are not reached

16. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

17. Average Price Captured
Harvest
Averaging
Price Target
Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Average
3.29
3.42
3.33
3.41
Min
Max

18. Marketing Types Extended Time and Price
Sell 25% in March or when futures prices > production costs
Sell 25% in April or when futures prices > costs + $0.25
Sell 25% in May or when futures prices > costs + $0.50
Only make March-May sales if futures prices > costs
Sell remaining crop at harvest
Sets basis at harvest
Defaults to harvest sales if price objectives are not reached

19. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

20. Average Price Captured
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Average
3.29
3.42
3.33
3.41
3.34
Min
Max

21. Extended Time and Price
Lowest Average
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Lowest
out of
15 years 10 2 3 6 4

22. Extended Time and Price
Highest Average
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Highest
out of
15 years 4 2 6

23. Extended Time and Price
Longer History
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
Average
2.59
2.70
2.65
2.66
Min
1.14
1.41
Max
7.42
6.17
5.97
5.94
Low Price 25 8 4 11 9
High Price 10 16
Out of 39 years ( )

24. Class web site: See you in lab.
See you in lab.