Have A Disciplined Approach To Marketing Crops

DR. AARON SMITH

KNOXVILLE, TENNESSEE

Since September, the March corn futures contract price has increased from $4.10 to $4.98. Pricing into market rallies is a strategy that allows farmers to secure a futures market price, on a percentage of the crops held in storage, for a defined increase in the futures market price. The thought process for this strategy is to secure pricing at defined intervals in case the price rally stalls or reverses and prices decline. The strategy won’t result in marketing home runs (selling everything at the top of the market), but it will avoid strikeouts (prices rally and then decline with no price action taken by the farmer). 

For example, for the 2024 crop year, if you had 200,000 bushels of corn unpriced in storage at the end of harvest, you could have set a target to secure a futures price on 20% (40,000 bushels) of the total amount held in storage for each 25-cent increase in the future’s market price. For the current marketing year, this strategy would have triggered sales of 40,000 bushels on September 24 at $4.35; January 6 at $4.60; and January 17 at $4.85. In total this would have resulted in 120,000 bushels of sales at an average March futures price of $4.60, leaving 80,000 bushels to be priced moving forward. The next target price would be $5.10 and then $5.35 where all 200,000 bushels will have a futures price established. This example could be modified using the same process for cash prices. The percentage of crops held in storage to be priced for each incremental increase in price, and the increment that triggers sales, can be set higher or lower than in this example based on the seller’s preference. 

Having a disciplined approach to marketing crops, with specific price targets, can assist in taking some of the emotions out of marketing decisions. Far too often market rallies are ruined by hope and inaction. It is human nature that once prices move higher, to increase sales price targets. This repeats until the market rally goes unacted upon and prices decline. A disciplined, systematic approach for the current price environment can assist in making pricing decisions. 

Corn

Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at West, North- west, West-Central, North-Central, and Mississippi River elevators and barge points. Overall, basis for the week ranged from 15 under to 28 over, with an average of 12 over the March futures at elevators and barge points. Ethanol production for the week ending January 31 was 1.112 million barrels per day, up 97,000 compared to the previous week. Ethanol stocks were 26.412 million barrels, up 0.690 million barrels compared to last week. Corn net sales reported by exporters for January 24-30 were net sales of 58.2 million bushels for the 2024/25 marketing year and 2.0 million bushels for the 2025/26 marketing year. Exports for the same period were up 2% compared to last week at 53.2 million bushels. Corn export sales and commitments were 72% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31) compared to the previous 5-year average of 70%. Cash prices ranged from $4.51 to $5.24 at elevators and barge points. March 2025 corn futures closed at $4.87, up 5 cents since last Friday. For the week, March 2025 corn futures traded between $4.72 and $4.98. May 2025 corn futures closed at $5.00, up 7 cents since last Friday. 

Mar/May and Mar/Dec future spreads were 13 and -21 cents. December 2025 corn futures closed at $4.66, up 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.70 December 2025 Put Option costing 41 cents establishing a $4.29 futures floor. 

Soybeans

Across Tennessee the average soybean basis weakened or remained unchanged at West, Northwest, North-Central, West- Central, and Mississippi River elevators and barge points. Average basis ranged from 31 under to 12 over the March futures contract, with an average basis at the end of the week of 1 under. Soybean net weekly sales reported by exporters were net sales of 14.2 million bushels for the 2024/25 marketing year. Exports for the same period were up 62% compared to last week at 43.8 million bushels. Soybean export sales and commitments were 87% of the USDA estimated total annual exports for the 2024/25 marketing year (September 1 to August 31), compared to the previous 5-year average of 85%. Cash soybean prices at elevators and barge points ranged from $10.25 to $11.01. March 2025 soybean futures closed at $10.49, up 7 cents since last Friday. For the week, March 2025 soybean futures traded between $10.31 and $10.79. The March soybean-to-corn price ratio was 2.19 at the end of the week. May 2025 soybean futures closed at $10.65, up 8 cents since last Friday. 

Mar/May and Mar/Nov future spreads were 16 and 8 cents. November 2025 soybean futures closed at $10.57, up 6 cents since last Friday. Downside price protection could be achieved by purchasing a $10.60 November 2025 Put Option which would cost 63 cents and set a $9.97 futures floor. Nov/Dec 2025 soybean-to-corn price ratio was 2.27 at the end of the week. 

Cotton

North Delta upland cotton spot price quotes for February 6 were 63.53 cents/lb (41-4-34) and 65.53 cents/lb (31-3-35). Adjust- ed World Price (AWP) decreased 0.84 cents to 53.18 cents. Cotton net weekly sales reported by exporters were net sales of 188,900 bales for the 2024/25 marketing year and 47,300 bales for the 2025/26 marketing year. Exports for the same period were up 44% compared to last week at 221,100 bales. Upland cotton export sales were 86% of the USDA estimated total annual exports for the 2024/25 marketing year (August 1 to July 31), compared to the previous 5-year average of 88%. March 2025 cotton futures closed at 65.63 cents, down 0.25 cents since last Friday. For the week, March 2025 cotton futures traded between 65.01 and 67.31 cents. May 2025 cotton futures closed at 66.82 cents, down 0.22 cents since last Friday. 

Mar/May and Mar/Dec cotton futures spreads were 1.19 cents and 2.98 cents. December 2025 cotton futures closed at 68.61 cents, down 0.1 cents since last Friday. Downside price protection could be obtained by purchasing a 69 cent December 2025 Put Option costing 4.18 cents establishing a 64.82 cent futures floor. 

Wheat

Wheat net weekly sales reported by exporters were net sales of 16.1 million bushels for the 2024/25 marketing year and 1.7 million bushels for the 2025/26 marketing year. Exports for the same period were down 55% compared to last week at 9.7 million bushels. Wheat export sales were 81% of the USDA estimated total annual exports for the 2024/25 marketing year (June 1 to May 31), compared to the previous 5-year average of 90%. Wheat cash prices at elevators and barge points ranged from $5.27 to $5.53. March 2025 wheat futures closed at $5.82, up 23 cents since last Friday. The March wheat-to-corn price ratio was 1.20. March 2025 wheat futures traded between $5.50 and $5.92 this week. May 2025 wheat futures closed at $5.95, up 23 cents since last Friday. 

Mar/May and Mar/Jul future spreads were 13 and 24 cents. July cash contracts at elevators and barge points ranged from $5.32 to $5.98. July 2025 wheat futures closed at $6.06, up 22 cents since last Friday. Downside price protection could be obtained by purchasing a $6.10 July 2025 Put Option costing 48 cents establishing a $5.62 futures floor.   ∆