With another U.S. harvest all but finished it is finally time for farmers to kick their feet up and relax a bit, right?

Think again!

As soon as the last bushel of corn is stuffed in the bin or taken to town farmers are right back at it preparing for next year’s crop. But there’s another chore to tackle, as you finish fall tillage, anhydrous apps, or winter wheat seeding: Marketing next year’s crop.

There are plenty of reasons to start now. The Chicago Board of Trade offers futures contracts three years out. Currently you could go sell December 2025 futures if you wanted.

Maybe marketing three years out is jumping the gun, but we should absolutely be focusing on our 2023 crop.

Calculate break evens

Discussions on input prices have been going on since at least late summer, and a lot of farms will be able to calculate their breakeven by the first of the year. Many expect to see higher costs and lower returns in 2023, closer to those of 2013-2019 than what we have seen in recent years.

We should start to manage that risk with marketing.

Options are a great way to take some risk off the table but remain flexible; after all we are still 12 months away from 2023 harvest. With the use of puts and calls a farmer can lock in a floor price but remain able to participate in rallies. After all, no one knows what prices will do in the next 12 months.

From 2007-2021 we saw an average yearly price range of over $2.00 on corn and $4.00 on soybeans. Do we really think 2023 will bring anything different? The ongoing war in Ukraine, economic uncertainty, and South America’s growing season are just a few things that can shoot the market higher or push it lower. With options in place, you can enjoy the rollercoaster ride instead of holding on for dear life.

At the time of this writing, you could go out and buy puts that would give you a $5.60 futures floor on corn and $12.50 on soybeans all the way through next harvest. Let that sink in.

Protect profit until spring?

Maybe you don’t want a floor all the way out to harvest just yet, but would love to be protected at least until the spring crop insurance price is determined. You could buy a put that gives you a $6.00 floor and expires with only two days left to establish the spring price.

The point is, there are great strategies using options to start marketing your crop even this far out.

So, as you are finishing up field work this fall, don’t just focus on locking in your input prices and getting squared away for the tax man. Make sure you spend some time coming up with a marketing strategy to implement for 2023’s crop. With all the moving parts in today’s world, it is more important than ever to understand all the tools at your disposal, including puts and calls. Look to offload some of the extreme price risk farmers take on every year.

After you are done with all of that, maybe then you can find some time to kick your feet up and relax a bit!

Contact Advance Trading at (800) 664-2321 or go to www.advance-trading.com.

Information provided may include opinions of the author and is subject to the following disclosures:

The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.