Last year was difficult for those who are accustomed to making preharvest sales of the year’s corn crop. From 1979 to 2019, October’s average December futures prices were lower than February’s average December futures prices 70% of the time.

This is what many would call a normal seasonal pattern for prices, but this was not the case for the 2020 season. Instead, the typical March through July seasonal high was replaced by a later-fall seasonal high. Those familiar with commodity markets call this an inverted market.

Does the 2020 price pattern alter the choices you will or should make in the 2021 season? Is the same seasonal pattern or a fall run on corn expected to reoccur? Is it wise to forward-contract? How do you best capture any price swings in the market?

Unfortunately, I have little confidence in my (or anyone’s) ability to accurately predict the 2021 seasonal pattern, so I have no true recommendation. From my experience as a professional agricultural economist, I suggest that nobody really knows the answers to these questions. I do have confidence in saying, however, that the market is uncertain and unexpected price changes will happen, but when is unknown.

Four principles

There are four basic principles of practicing good marketing and developing a solid market strategy. I would like to note that everyone who has corn to sell also has a strategy already in place, even if that means no strategy at all. The four principles provide a foundation to build upon and clarity to decision-making during times of uncertainty.

These principles are based on what is known, require a degree of commitment and account for individual operations and operator goals. Furthermore, these principles allow the people using them to be flexible in their application, which encourages and allows creativity and variation among operations and operators.

Principle 1. It is impossible to make good decisions with good outcomes consistently, when decisions are based on speculation and not fact. Someone once said that even a broken clock is right twice a day. Risk-taking is inherent in farming, and there is no need to exacerbate this by knowingly taking unnecessary risks in hopes of hitting it big.

This seems to be what happens when opportunities to make a profit are missed in favor of “possible” further price increases. Additionally, this suggests that any opportunity to forward-contract grain for a profit should be considered carefully and used appropriately, regardless of what you may think the future holds.

Principle 2. Decide first on what type and how much risk you are willing to accept, and then make decisions accordingly and consistently. Most good business decisions are often those that are carefully thought out and require thorough understanding. While no one wants to miss an opportunity, hasty decisions may lead to less-than-ideal results. Do not confuse those decisions that are understood and well-considered with the speed of making said choices.

For example, the actual execution of selling grain at a specific price may be completed in a split second, but it may have been contemplated and decided months beforehand — using information about current markets and understanding of the year’s production costs.

Avoid making seat-of-the-pants calls as much as possible. This does not mean you will not have decisions like this to make, but those decisions should be guided by conscientious consideration and understanding of impact to your farm and its viability.

Principle 3. Always be open to new information and new ways, but do so thoughtfully, cautiously and carefully. As pointed out in the introduction of this article, last year’s pricing happened last year, and this year’s pricing is a completely new story with new circumstances. All of us are subject to heuristic bias.

Simply put, complexity is often simplified into rules of thumb, which often results in making misjudgments and achieving less-than-desired results. While rules of thumb can be valuable in general, it is important to always be looking for new information, new techniques and improved ways to make better marketing choices.

Principle 4. While you might be the only one making sales decisions, there are many resources, advisers and experts who can assist. Each of us has those things that we do well and like to do, and those things that we find difficult or disinteresting. If marketing is something that makes you feel negatively, the results will likely suffer and be less than optimal.

I encourage you to seek information, assistance or advice, so as to make this part of your operation perform at a higher level. My experience with the Testing Ag Performance Solutions, or TAPS, program has shown me that there is a lot of variation among producers and average price received for their crop.

In this past corn competition, out of 26 competitors, the difference between the high and low price was nearly $1.43 per bushel. That difference would amount to $308.19 per acre at an average yield of 216 bushels per acre.

In a business where cents per bushel can make a difference between profit and loss, it seems obvious that marketing proficiency is integral to building and maintaining a successful farming operation. If the past suggests anything about the future, regardless of the market movements during the coming year, it is almost certain that there will be seasonal times of opportunity.

Seize on opportunities

For instance, at the time of writing of this article, futures prices are much higher than a year ago. With this higher price, it is possible to sell corn grain for more than what USDA states as production costs. This opportunity should not be taken lightly.

Unfortunately, or depending on the outcome, fortunately, there is something within us all that seeks more. This desire can be a good thing when it helps us work harder to achieve our goals, but detrimental when it keeps us from making solid financial choices.

From my perspective, it is possible to lock in profit for at least some of the expected production. There are those who view selling at anything but the highest price of the year as a failure, and I wish them good luck. The ability to make this choice accurately requires advance knowledge of the unpredictable and extreme fortuity.

I see annual marketing as something akin to landing an aircraft during turbulence, where marketing at a price above the average is equivalent to landing the plane intact and safe.

When forced into landing, success is measured primarily by survival and not perceived skill, while in marketing, success is not necessarily measured as capturing the once single high price, but instead selling at a price that results in profitability. Happy landings.

Stockton is as associate professor with University of Nebraska-Lincoln agricultural economics.