Forward Thinking

By Lindy McMillen
Grain Originator- Dighton Area
Charts Courtesy of Stone X
 
One key piece in a solid marketing plan is the use of forward contracting. Historically, forward selling a percentage of grain is a best marketing practice, except for a few outlier years. The market tends to be more favorable for fall crops like corn and soybeans in the summer, when weather changes during the growing season can create scares about the crop. During its growing season, wheat typically will see market highs put in during the spring. The charts below do a great job of illustrating 3-year and 5-year seasonal trends, as well as overlaying the current year.
 
While it wouldn’t be advisable to sell 100% of your operation’s expected crop, there can be a lot of value in locking in a price on a percentage of what you intend to raise. Forward contracting mitigates downside risk, while also allowing a farm to protect their margin on a percentage of bushels. Garden City Co-op offers a variety of options to forward contract your crop including forward priced contracts, basis contracts, hedge-to-arrive contracts, and in-house specialty contracts. There is no one-size-fits-all approach to forward contracting, but your GCC grain team would be happy to talk about what marketing strategies could be the best fit for your farm.