When Guy Mills was a freshman in high school, his FFA advisor introduced a concept to him that would stick with him forever: using the futures market to sell corn at a profit. "I realized then that there are opportunities for profit. You just need to capitalize on them," says Mills, who farms near Ansley.

Actively using the futures market is one tool to help make a profit, but it comes with some uncertainty. The best way to mitigate uncertainty is to build confidence in marketing decisions — and this is where data can be used to turn into knowledge, which requires a kind of contrarian mindset, Mills says.

LIKE A CONTRARIAN: "I don't know what tomorrow's going to bring, but what I do know is what the price will accomplish for me," says Guy Mills.

"I don't know what tomorrow's going to bring, but what I do know is what the price will accomplish for me," he says. "Thinking like a contrarian means when you have an opportunity to capture profits, even if everyone's saying prices are going to go up, it's probably best to go ahead and sell your corn for a profit as long as you've satisfied all your goals."

For Mills, it starts with establishing goals for his farming operation. Mills balances his management on three pillars: finance, marketing and production. He uses his income statement to keep track of income and expenses, and balance the marketing pillar with the finance pillar. This way, he knows what price he needs to sell grain at to accomplish his financial goals.

See related story: Managing farm finances without data is like driving without a rearview mirror

However, before getting started using the futures market, Cory Walters, assistant professor of agricultural economics at UNL, notes you've got to do your homework on how the markets work.

This includes keeping track of the price volatility factor, past price history and USDA-projected price range, as well as weather updates and current global events and how they affect prices. But it also means how futures contracts work, how carry in the market works (the difference between two futures markets), how cash markets work, and how crop insurance works with the futures market.

"It's going to be hard work, but you have to improve your understanding of how these markets operate," Walters says. "But this hard work will pay off. A couple more pennies, a dime, nickel or quarter matters to our bottom line when you're trying to minimize those losses."

How does this knowledge pay off? According to Mills, "the market can tell you when to sell."

One example is knowing what the carry is between two futures markets. When a full carry is realized, the market is signaling to store your corn to a demand-driven situation where the front months are higher than deferred months, Mills says.

If growers have grain storage available and have penciled out the costs to store that grain, this means they could sell corn on a December futures contract, roll the futures position to July, and because basis is typically lower outside of the harvest season, sell corn at a profit over the cash price at harvest.

Of course, there will still be some uncertainty when it comes to actively using the futures market, but crop insurance takes what Mills refers to as the "yeah but" out of hedging.

"You remove a whole bunch of production [revenue] uncertainty with crop insurance, which then allows you to hedge. Your risk of not performing on that hedging contract has just gone down, possibly to zero," explains Walters. "Second, insurance is subsidized, so it increases your expected income naturally."

When borrowing money, it's critical to have a good relationship with your lender, and make sure your lender understands your goals and the futures market, Mills says. It's a good idea to keep them updated on anything that can affect profit or expenses favorably or unfavorably, he adds.

It's also important to consider how much risk you feel comfortable stomaching. "There is no prescription. This is markets. There's a lot of uncertainty; there are different preferences for different decision makers, so there's no prescription," says Walters. "The best way to improve confidence in marketing decision-making is to understand how things work in commodity markets and how you interact with them."