2. 1 BASIC MARKETING Annie’s Project April 12, 2007

3. 2 Marketing Risks Marketing is the part of business that transforms production activities into financial success. Unanticipated forces can lead to dramatic changes in crop and livestock prices. When these forces are understood, they become important considerations for the skilled marketer. To be successful, you should take an informed and balanced approach to making marketing decisions.

4. 3 Marketing Risks Personal Considerations in Marketing: Marketing agricultural products involves information, objectivity, attitude and skill. Developing a Marketing Plan: An accurate understanding of production costs is a critical part of a sound marketing plan....for you and for professionals who work with you. Marketing Plan Discipline: A marketing plan is of little value if actual decisions deviate from the plan.

5. 4 Marketing Tools Storage Cash Sale Deferred Payment Contracts Fixed Price Contract/Deferred Deliver Basis Contract Deferred or Delayed Price Contract Minimum Price Contract Hedge-to-Arrive Contract Short Hedge Put Option Purchase Contracted Production Marketing Cooperatives Direct Sales

6. 5 What Markets? Farmers operate in two related marketing systems—cash and futures The cash market is with the end user for delivery now or on a forward contract. The result is delivery of grain produced. The futures market allows establishment of grain prices for delivery in the future or to establish a price level in the future. Positions in the futures market must be converted to the cash market since grain is generally not delivered in the futures market.

7. 6 The Cash Market Most farmers are most comfortable in this market –Cash bid is what is paid for grain delivered today –Forward Contract bid is what will be paid when grain is delivered in the future or title is turned over to the elevator, processor, end user in the future

8. 7 BASIS defined: The difference between local cash price and the futures price. CASH minus FUTURES = BASIS $48.00 - $46.00 = $2.00 $3.23-$3.61 = -$0.38

9. 8 Cash Market Today’s cash bid is a combination of factors –Basis Transportation to the end user Supply of grain available today End User Profit –Trading level at CBOT 4-11-07 closing cash bid at MaxYield Cooperative’s West Bend locations is $3.60 ¾ May futures less $.33 ¾ basis equals $3.27 4-11-07 closing cash bid at Voyager Ethanol is $3.60 ¾ May futures less $.21 ¾ basis equals $3.39

10. 9 www.cbot.com

11. 10 http://www.maxyieldcooperative.com

12. 11 http://www.voyagerethanol.com/

13. 12 www.cbot.com

14. 13 Grain Bids – MaxYield Cooperative http://www.maxyieldcooperative.com

15. 14 Forward Contract We have looked at the cash market bid for immediate delivery Elevators also establish forward contract bids for delivery into the future such as MaxYield Cooperative’s Algona Branch $3.35 for June- July and $3.39 for October or New Crop These bids are good from market close on 4/11/07 until market opens on April 12 Bids will change as the futures market and basis factors change

16. 15 Futures Contract A contract traded on a futures exchange for the delivery of a specified commodity at a future time. The contract specifies the item to be delivered and the terms and conditions of delivery. For example, a contract of #2 Yellow Corn is 5000 bushels of corn. Contract months are March, May, July, September, and December each year A contract of #1 Yellow Soybeans is 5000 bushels of soybeans. Contract months are January, March, May, July, August, September, and November

17. 16 Corn Futures Contract CBOT corn futures contract for 5000 bushels can be sold or purchased for an initial margin of $1000 which must be deposited with broker in your account Value of the contract is 5000*3.87 ¾ or $19,387.50 If the market moves against you (up if you sold, down if you bought), you must maintain at least $1000 in your account.

18. 17 www.tfc-charts.com/ May 07 Corn

19. 18 www.tfc-charts.com/ Weekly Corn

20. 19 Monthly Corn www.tfc-charts.com/

21. 20 Soybean Futures Contract CBOT soybean futures contract for 5000 bushels can be sold or purchased for an initial margin of $1000 which must be deposited with broker in your account Value of the contract is 5000*7.91 ¾ or $39587.50 If the market moves against you (up if you sold, down if you bought), you must maintain at least $1000 in your account.

22. 21 www.tfc-charts.com/ May 07 Soybeans

23. 22 Weekly Soybeans www.tfc-charts.com/

24. 23 www.tfc-charts.com/ Monthly Soybeans

25. 24 Futures Contract Every one cent move against you removes $50 from your account (5000*.01=$50) If you fail to deposit the necessary funds on a timely basis (immediately), you will lose your position in the market Futures contracts are normally not delivered, rather an offset of the original position is done— buy a contract if you originally sold one or sell a contract if you originally bought one

26. 25 Lean Hog Futures Contract Lean Hog Futures Contract (LN) –Chicago Mercantile Exchange (CME) contract –40,000 pounds (216 – 185# hog carcasses) –Contract Months—Feb Apr, May, Jun, Jul, Aug, Oct, and Dec –Contract expires on the last business day of the month –Contract is cash settled –Minimum movement $.00025/lb = $10/contract –Maximum movement $.02/lb = $800/contract –Margins Initial---Hedge $800 Maintenance---Hedge $800

27. 26 www.tfc-charts.com/ Weekly Lean Hog Futures

28. 27 Live Cattle Futures Contract Live Cattle Futures Contract (LC) –Chicago Mercantile Exchange (CME) contract –40,000 pounds (33 - 1200# cattle) –Contract Months—Feb, Apr, Jun, Aug, Oct, Dec –Contract expires on the last business day of the month –Contract is settled by physical delivery of cattle –Minimum movement $.00025/lb = $10/contract –Maximum movement $.03/lb = $1200/contract –Margins Initial---Hedge $750 Maintenance---Hedge $750

29. 28 Weekly Live Cattle Futures www.tfc-charts.com/

30. 29 Monthly Live Cattle Futures www.tfc-charts.com/

31. 30 www.tfc-charts.com/ Weekly Feeder Cattle Futures

32. 31 Hedging defined: Taking an equal and opposite position in the futures market. Have cattle in feedlot now to sell in June, sell June Futures now. Taking an action now in the futures market that you will later in the cash market. –will sell cash corn later --> sell futures now

33. 32 Hedging Establishing price level by selling a CBOT futures contract through a broker Establishes price level, but does not establish basis. For example, on April 11 you could have sold Dec Corn at $3.87 ¾

34. 33 Hedging Example DATECASHFUTURESBASIS June Goal: $3.60 Harvest Cash Sell Dec. Corn Futures @ $4.00 Est.: -0.40 Oct. Actual: -0.40 Buy Dec. Corn Futures @ $3.40 Sell Cash Corn @ $3.00 Results-0.60+0.600.00

35. 34 Net price calculation $4.00 futures sold less -0.40 actual basis = $3.60 cash price or $3.00 cash sold + 0.60 futures gain = $3.60 cash price.

36. 35 Hedging Example DATECASHFUTURESBASIS June Goal: $3.60 Harvest Cash Sell Dec. Corn Futures @ $4.00 Est. -0.40 Oct. Buy Dec. Corn Futures @ $4.40 Sell Cash Corn @ $4.00 Results+0.40-0.400.00 Actual -0.40

37. 36 Net price calculation $4.00 futures sold less -0.40 actual basis = $3.60 cash price or $4.00 cash sold - 0.40 futures loss = $3.60 cash price.

38. 37 Hedging Example DATECASHFUTURESBASIS June Goal: $3.60 Harvest Cash Sell Dec. Corn Futures @ $4.00 Est.: -0.40 Oct. Actual: -0.50 Buy Dec. Corn Futures @ $4.50 Sell Cash Corn @ $4.00 Results+0.40-0.50-0.10

39. 38 Net price calculation $4.00 futures sold less -0.50 actual basis = $3.50 cash price or $4.00 cash sold - 0.50 futures loss = $3.50 cash price.

40. 39 Pricing Tools Fixed-price tools Forward contract Sell futures Futures fixed (HTA) Minimum-price tools –Forward contract and buy a call option –Buy a put option –Minimum price tool offered by local elevator (?)

41. 40 Pricing Tools Fixed-price tools + Final price is known (or nearly known) – No “upside” potential if prices go higher Minimum-price tools + Upside potential – High cost makes it difficult to use in early sales (which are likely lower price sales)

42. 41 Fixed-Price Tools Forward contract + Exact price is known (basis is fixed) + Contract can be for any bushel amount, not just 5,000 bushel increments + No brokerage fee, margin accounts or margin calls – Ends in delivery – Sometimes difficult to get a “fair” basis

43. 42 Fixed-Price Tools Sell futures (hedging) + Average price is usually higher compared to forward contracting + Not locked into delivery, can be rolled into a storage hedge to capture market carry after harvest – Contract in units of 5,000 bushels – Requires margin account and must provide margin money as market fluctuates (margin calls) – Must buy futures to exit the position – Basis risk

44. 43 Fixed-Price Tools Sell futures – What is my expected price? futures price (when sold) + expected harvest basis – brokerage fees = expected price $7.92 + (-0.50) - 0.01$7.41

45. 44 Fixed-Price Tools Futures fixed contract (Hedge-to-Arrive) + Just like selling futures except you work with local elevator + Contract can be for any bushel amount, not just 5,000 bushel increments + No brokerage fee, margin accounts or margin calls + Most elevators let you lock-in the basis sometime during the contract + May be rolled into storage hedge (terms differ) – Basis risk – Locked into local elevator delivery

46. 45 Fixed-Price Tools Futures Fixed – What is my expected price? Futures price (when sold) + expected harvest basis = expected price $7.92 + (-0.50)$7.42 Futures price is established when contract is made with elevator. Can contract for any bushel amount. Basis is locked in before dates specified in contract. Margin (to specified limit) is covered by elevator. Grain is delivered to elevator specified in contract.

47. 46 Options on Agricultural Futures Protection with potential!! Buying options offers: risk management against adverse price movement AND potential for price improvement.

48. 47 Option Terms Put Call Exercise Strike Price Expiration Date Premium

49. 48 Options on Ag. Futures Terms Call Option:The right, but not the obligation to buy a futures contract. Put Option:The right, but not the obligation to sell a futures contract.

50. 49

51. 50

52. 51 Minimum-Price Tools Buy a put option –Corn example: Dec futures trading at $3.88, a put at $3.90 strike price has 31 cent premium –What is the minimum price? put strike price + expected basis - put premium - brokerage fee = minimum price $3.90 + (-0.30) - 0.31 - 0.01$3.28

53. 52 Minimum-Price Tools Buy a put option –Soybean example: Nov futures trading at $7.92, a put at $7.80 strike price has 44 cent premium –What is the minimum price? put strike price + expected basis - put premium - brokerage fee = minimum price $7.80 + (-0.60) - 0.44 - 0.01$6.75

54. 53 Call Option The right to buy futures Buyer has a price floor which is equal to: FC Price - Premium - Brokerage fees

55. 54 Minimum-Price Tools Forward contract AND buy a call option –Corn example: Forward contract price is $3.41, Dec futures trading at $3.88, a call at $3.90 strike price has a 31 cent premium –What is the minimum price? forward contract price – call premium – brokerage fee = minimum price $3.41 - 0.31 - 0.01$3.09

56. 55 Minimum-Price Tools Forward contract AND buy a call option –Soybean example: Forward contract price is $7.34, Nov futures trading at $7.92, a call at $7.80 strike price has a 44 cent premium –What is the minimum price? forward contract price – call premium – brokerage fee = minimum price $7.34 - 0.44 - 0.01$6.89

57. 56 Put Option The right to sell futures Buyer has a price floor which is equal to: Strike Price - Premium +/- Basis estimate - Brokerage fees

58. 57 Buying Call Options As price protection for an input: –corn, –soybean meal, –feeder cattle. Creates a price ceiling. Price Ceiling is calculated as: Strike Price + Premium +/- Basis est. = Price Ceiling

59. 58 Why a Farmer might buy options: Buy a put -->need price protection (floor) for crops or livestock. Buy a call -->need price protection (ceiling) on feed requirements. Buy a call -->has crop sold and wishes to retain ownership (not IRS definition of hedging).

60. 59 Scale in Selling One way to approach marketing is to have a plan to scale in sell smaller increments rather than selling huge amounts at the objective. Example: (25,000 bu., objective $2.50) –Sell 5000 bu. @ $2.30. –Sell 5000 bu. @ $2.40 –Sell 5000 bu. @ $2.50 –Sell 5000 bu. @ $2.60 –Sell 5000 bu. @ $2.70

61. 60 Pre-Harvest Marketing Marketing of crop before it is actually harvested Made possible by revenue type crop insurance Recommended to not sell more than crop insurance coverage For example, if 70% CRC coverage is purchased, don’t sell more than 70% of expected production

62. 61 Objective: Buy crop insurance to protect my production risk, and have 75% of my anticipated corn crop (based on APH yield) priced by late May. Price 10,000 bushels at $2.10 cash price ($2.50 Dec. futures) using forward contract/futures hedge/futures fixed contract. Price 10,000 bushels at $2.22c/2.62f, or by Jan 25, using a fixed-price contract. Price 15,000 bushels at $2.34c/2.74f, or by Mar 25, using a fixed-price contract. Price 10,000 bushels at $2.46c/2.86f, or by Apr 7, consider options/trend system. Price 10,000 bushels at $2.58c/2.98f, or by Apr 22, consider options/trend system. Price 10,000 bushels at $2.70c/3.10f, or by May 23, consider options/trend system. Plan starts on November 1, 2004. Earlier sales will be made at a 15 cent premium to price targets noted above. Ignore decision dates and make no sale if prices are lower than $2.10 local cash price/$2.50 December futures. Exit all options positions by mid-September. Tillman Farm Pre-Harvest Corn Marketing Plan

63. 62 Objective: Buy crop insurance to protect my production risk, and have 75% of my anticipated corn crop (based on APH yield) priced by late May. Price 10,000 bushels at $2.10 cash price ($2.50 Dec. futures) using forward contract/futures hedge/futures fixed contract. Price 10,000 bushels at $2.22c/2.62f, or by Jan 25, using a fixed-price contract. Price 15,000 bushels at $2.34c/2.74f, or by Mar 25, using a fixed-price contract. Price 10,000 bushels at $2.46c/2.86f, or by Apr 7, consider options/trend system. Price 10,000 bushels at $2.58c/2.98f, or by Apr 22, consider options/trend system. Price 10,000 bushels at $2.70c/3.10f, or by May 23, consider options/trend system. Plan starts on November 1, 2004. Earlier sales will be made at a 15 cent premium to price targets noted above. Ignore decision dates and make no sale if prices are lower than $2.10 local cash price/$2.50 December futures. Exit all options positions by mid-September. Pre-Harvest Corn Marketing Plan (1) Pricing targets

64. 63 Objective: Buy crop insurance to protect my production risk, and have 75% of my anticipated corn crop (based on APH yield) priced by late May. Price 10,000 bushels at $2.10 cash price ($2.50 Dec. futures) using forward contract/futures hedge/futures fixed contract. Price 10,000 bushels at $2.22c/2.62f, or by Jan 25, using a fixed-price contract. Price 15,000 bushels at $2.34c/2.74f, or by Mar 25, using a fixed-price contract. Price 10,000 bushels at $2.46c/2.86f, or by Apr 7, consider options/trend system. Price 10,000 bushels at $2.58c/2.98f, or by Apr 22, consider options/trend system. Price 10,000 bushels at $2.70c/3.10f, or by May 23, consider options/trend system. Plan starts on November 1, 2004. Earlier sales will be made at a 15 cent premium to price targets noted above. Ignore decision dates and make no sale if prices are lower than $2.10 local cash price/$2.50 December futures. Exit all options positions by mid-September. (2) Decision dates Pre-Harvest Corn Marketing Plan

65. 64 Objective: Buy crop insurance to protect my production risk, and have 75% of my anticipated corn crop (based on APH yield) priced by late May. Price 10,000 bushels at $2.10 cash price ($2.50 Dec. futures) using forward contract/futures hedge/futures fixed contract. Price 10,000 bushels at $2.22c/2.62f, or by Jan 25, using a fixed-price contract. Price 15,000 bushels at $2.34c/2.74f, or by Mar 25, using a fixed-price contract. Price 10,000 bushels at $2.46c/2.86f, or by Apr 7, consider options/trend system. Price 10,000 bushels at $2.58c/2.98f, or by Apr 22, consider options/trend system. Price 10,000 bushels at $2.70c/3.10f, or by May 23, consider options/trend system. Plan starts on November 1, 2004. Earlier sales will be made at a 15 cent premium to price targets noted above. Ignore decision dates and make no sale if prices are lower than $2.10 local cash price/$2.50 December futures. Exit all options positions by mid-September. Pre-Harvest Corn Marketing Plan (3) Pricing tools & trump cards

66. 65 Post Harvest Marketing Seasonal Price Trends Carry and the market Cost of Storing Grain Exit Strategies 11 th Commandment of grain marketing 12 th Commandment of grain marketing

67. 66 Post Harvest Seasonal Price Trends Q: Are there any reliable seasonal price patterns after harvest? A: Yes! Cash corn prices tend to rise from harvest to late spring. Fact: Since 1980, the May cash corn price has exceeded October in 21 of 25 years (84%).

68. 67 Post Harvest Seasonal Price Trends Concerning unpriced grain in the bin, are there any reliable seasonal price patterns after harvest? cash price = futures price + basis

69. 68 Summary: What have we learned about seasonal price patterns after harvest? cash prices… on average rise, driven by the basis futures prices… on average flat, but volatile! basis… improves Post Harvest Seasonal Price Trends

70. 69 Carrying Charges and Selling the Carry Question: How can I better manage post harvest cash price risks while assuring myself a reasonable gain on grain held in storage? Answer: Sell the carry!

71. 70 Carrying Charges and Selling the Carry What is the carry? Carrying charges are the difference between futures delivery months (e.g. December and July) They speak directly to a critical question in grain markets: To store or not to store? Let’s explore carrying charges in storable commodities…

72. 71 Sep. $2.39 July $2.35 May $2.29 March $2.21 Dec. $2.09 What determines price differences between delivery months (e.g. December vs. March corn)? Is it expectations? These price differences reflect market determined storage costs (aka carrying charges). Large carrying charges, where deferred contracts trade at a premium to nearby contracts, are common when free supplies are large. Carrying Charges and Selling the Carry CBOT Corn Futures: October 12, 2001

73. 72 Nov. $7.29 Mar $7.10 May $6.65 Jul $6.50 Aug. $6.27 This occurs when when supplies are small - a scarcity of stocks. The market says "we will pay a premium if you deliver now!". Inverse Carrying Charges: An inverted market represents the opposite of a carrying charge market – deferred contracts trade at a discount to nearby contracts. Carrying Charges and Selling the Carry CBOT Soybean Futures, Oct 17, 2003

74. 73 CBOT Corn Futures Carrying Charges at Harvest Year Dec fut 10/15 July fut 10/15 Dec/Jul Carry 19842.812.930.12 19852.212.430.22 19861.631.840.21 19871.882.050.18 19882.942.970.03 19892.362.490.13 19902.282.470.19 19912.462.670.21 19922.102.290.19 19932.492.630.15 19942.182.410.23 19953.283.330.05 19962.873.010.14 19972.903.070.17 19982.272.500.23 19991.992.230.23 20002.072.320.25 20012.062.320.26 20022.542.66 0.12 20032.172.310.15 20042.072.310.24 20052.042.310.27 Ave.2.342.520.18 What is the carry?

75. 74 CBOT Soybean Futures Carrying Charges at Harvest Year Nov fut 10/15 July fut 10/15 Nov/Jul Carry 19846.336.740.42 19855.045.460.43 19864.734.990.27 19875.435.760.33 19888.048.220.18 19895.475.870.40 19906.146.600.46 19915.485.890.40 19925.355.640.29 19936.156.340.20 19945.395.740.35 19956.576.870.30 19966.936.86(0.06) 19977.057.290.25 19985.565.900.34 19994.925.210.29 20004.655.010.36 20014.294.460.26 20025.485.520.04 20037.306.66(0.64) 20045.145.390.25 20055.906.170.28 Ave.5.796.020.23 What is the carry?

76. 75 What Does it Cost to Store Grain? On average, cash grain prices rise from harvest into early summer. But do prices rise enough to cover your cost of storage? What is your cost of storage?

77. 76 Commercial storage can be expensive, up to 3.5 cents per month. This does not include the cost of your money. What Does it Cost to Store Grain?

78. 77 Building new on-farm storage can also be expensive, but many farms have existing storage on the farm. What Does it Cost to Store Grain?

79. 78 For farms with existing storage, the costs are… (1) in/out costs (2) variable interest costs What Does it Cost to Store Grain?

80. 79 in/out storage costs operating/repairing equipment handling shrink, labor and trucking insurance, management corn: 8 cents * soybeans: 11 cents * * NDSU Extension Service estimates The in/out costs are incurred if the grain is held one day or one year. What Does it Cost to Store Grain?

81. 80 What Does it Cost to Store Grain? Interest expense is the largest piece of your variable storage costs You could sell your grain at harvest & … –pay off your banker and stop the interest expense –or buy a CD and get paid interest

82. 81 What Does it Cost to Store Grain? Your interest cost depends on whose money you are using. Are you a borrower or a saver?

83. 82 What Does it Cost to Store Grain? CornSoybeans Borrow at 8%?1.674.00 Save at 3%?0.631.50 Monthly Interest Costs* (cents per bushel) *assumes $2.50 corn, $6.00 soybeans

84. 83 What Does it Cost to Store Grain? The cost of corn storage from harvest to May (7 months) – two extremes… Commercial storage and debt? 7 months * 3.5 cents per =24.5 cents 7 months interest * 1.67 cents per = 11.7 cents Total36.2 cents On-farm storage and no debt? 7 months interest * 0.63 cents per = 4.4 cents Total4.4 cents

85. 84 Most operations probably experience a cost somewhere in the middle On-farm storage and debt In/out charge = 8.0 cents 7 months interest * 1.67 cents per = 11.7 cents Total19.7 cents What Does it Cost to Store Grain?

86. 85 What Does it Cost to Store Grain? But do cash prices rise enough to cover your cost of storage? Average cash price rise, harvest to May corn: 28 cents soybeans: 53 cents What is your cost of storage?

87. 86 A Word on Exit Strategies… Storing unpriced grain is both an opportunity and a risk. What price is enough for you to call your decision to store a success or failure? What is your exit strategy?

88. 87 A Word on Exit Strategies… Price driven exit strategies ü Sell all my grain in storage at a price x cents over my harvest price ü Sell all my grain in storage at a price x cents under my harvest price (stop the loss) ü Use a trailing stop Timing driven exit strategies ü Sell all my grain when the price trend changes from up to down ü Sell my grain in regular intervals over a particular time period (i.e. one truck per week over 8 weeks) ü Sell by the last half of May

89. 88 Do you hold your grain in storage too long? The case against holding grain beyond mid- summer is so strong that we often quote the “11 th Commandment” of grain marketing… “Thou shall not hold unpriced cash corn in the bin after July 1.” (August 1 for soybeans) The Peril of Holding Grain Too Long

90. 89 Since 1980, old crop grain held in the bin from July to October would have lost money or made less than 15 cents in*… 22 of 24 years in corn (92%) 20 of 24 years in soybeans (83%) *USDA/NASS data on Iowa monthly average corn and soybean prices. The Peril of Holding Grain Too Long

91. 90 What drives prices lower from summer to harvest? Basis! “Thou shall not hold unpriced cash corn in the bin after July 1.” (August 1 for soybeans) The 11 th Commandment can be seen as the ultimate exit strategy! The Peril of Holding Grain Too Long

92. 91 Objective: Seek strategies that offer a price higher than the loan rate. Hold no unpriced corn beyond July 1, 2007. 65,000 bushels: Place in storage and sell the carry with July futures. Exit plan: Unwind my storage hedge when the cash basis narrows to 30 under July futures, or by the first week of June. 19,000 bushels: Place in storage for later sale. Exit plan: Sell 6,000 bushels @ $2.80, 7,000 @ $3.05, and the last 6,000 @ $3.30. Bushels unsold at the end of April will be sold in equal increments in May and June. Use 15 cent trailing stop to make sales if market reverses trend. Corn: 2006 Post-Harvest Marketing Plan (assumes no pre-harvest marketing)

93. 92 Objective: Seek strategies that offer a price higher than the loan rate. Hold no unpriced beans beyond August 1, 2007. 10,000 bushels: Place in storage and sell the carry with July futures. Exit plan: Unwind my storage hedge when the cash basis narrows to 40 under July futures, or by the first week of June. 15,000 bushels: Take the loan and place in storage for later sale. Exit plan: Sell 5,000 bushels @ $5.70, 5,000 @ $6.00, and the last 5,000 @$6.30. Bushels unsold at the end of April will be sold in equal increments in May, June, and July. The loan rate is my downside protection. Soybeans: 2006 Post-Harvest Marketing Plan (assumes no pre-harvest marketing)

94. 93 Objective: Buy crop insurance to protect my production risk, and have 75% of my anticipated corn crop (based on APH yield) priced by late May. Price 10,000 bushels at $3.10 cash price ($3.50 Dec. futures) using forward contract/futures hedge/futures fixed contract. Price 10,000 bushels at $3.35c/3.75f, or by Jan 25, using a fixed-price contract. Price 15,000 bushels at $3.60c/4.00f, or by Mar 25, using a fixed-price contract. Price 10,000 bushels at $3.85c/4.25f, or by Apr 7, consider options/trend system. Price 10,000 bushels at $4.10c/4.50f, or by Apr 22, consider options/trend system. Price 10,000 bushels at $4.35c/4.90f, or by May 23, consider options/trend system. Plan starts on November 1, 2007. Earlier sales will be made at a 15 cent premium to price targets noted above. Ignore decision dates and make no sale if prices are lower than $2.50 local cash price/$2.90 December futures. Exit all options positions by mid-September. Tillman Farm Pre-Harvest Corn Marketing Plan – 2007

95. 94 Thank You! Ron Hook Farm Management Specialist 839 3 rd Ave. Sibley, IA 51249 712-754-3648 rhook@iastate.edu