Time spent learning marketing is time well spent, according to Phil Hofer, Bridgewater, S.D.

"Some people want to hire someone to do the marketing for them, but I have found that tackling it yourself pays for the rest of your life,” he says.

Hofer, who has raised corn and soybeans for 30 years, sits down each fall and figures his cost of production.

"Then I put in target orders [sales at his elevator]. Say for the sake of argument, I offer a certain number of bushels at $4.10, $4.20, etc. If the price gets there, the corn is sold. You hope your starting point is the worst sale you make."

Many times, by the time you hear the market has jumped, the opportunity already has passed. “One year, March corn opened near its low for the day at $3.61 ½, then bounced to 18 cents when the EPA raised the conventional ethanol blending required. It closed below $3.67. If you didn’t have an order in, you missed the highest part of the move, which lasted about an hour.”

Hofer takes 80% Revenue Protection on corn and 75% on soybeans. He multiplies the coverage by his 10-year actual production history and sells that amount of bushels.

He tries to market most of his insured corn bushels by July 4 because he’s found the best time to sell corn is usually between May 1 and June 15, or a little on either side of those dates.

“Soybeans are a little tougher animal to market because price patterns aren’t as consistent,” he says.

Hofer always separates the futures from basis. "It pays almost every year to stay in tune with local basis trends. In December, I usually lock in a basis contract for January through March deliveries based off the March contract. Then I roll to the May contract for April and May deliveries and the July contract for June and July. The basis seems to narrow up like clockwork, at least in this area."

2012 was the only year Hofer recalls that he had to rely on a crop insurance indemnity payment to make good on a contract.

“I sold pretty aggressively in the $5 range. Corn ultimately went to $8. Yields were hurt severely in this area. I still remember the day I took the indemnity check to the bank and then drove over to the elevator to buy out of the contracted bushels I wasn't able to grow.”

However, in the long run, forward-contacting has worked out well.

“Over time, what you gain on a forward contract most years far outweighs what you might be out in a severe year,” he says.

Source: Farm Credit Services’ May 2017 report, “Grain Marketing: Producer Practices and Attitudes”