Benefits of Tracking Grain Prices

Track commodity prices including cash, futures, puts and calls to assist in grain marketing decisions.
Benefits of Tracking Grain Prices - Articles

Updated: December 7, 2017

Benefits of Tracking Grain Prices

Dry Field Corn, by Nicole Santangelo, PSU

The biggest challenge I face with grain marketing is vocabulary. Sometimes I wonder if I understand the words involved. Let’s recall as grain producers there are only three possible marketing methods we can use at harvest; 1) sell off the harvester, 2) put grain in storage unpriced, and 3) put grain in storage priced for later delivery. The hard part is deciding which method to use and how many bushels to commit.

To assist with my understanding of the primary grain marketing tools (cash, futures, put, call) I regularly track prices throughout the year. By recording prices each month I start to get a better feel for how a price risk management tool is designed to operate. Maybe someday I’ll be confident enough to expand my use of one of these tools?

Table: My price tracking sheet for 2017 harvest corn

DateCashFutures (Dec.)PUT (4.00)CALL (4.00)
February 8, 20174.103.980.320.29
March 74.203.960.330.31
April 54.103.880.370.25
May 84.073.880.280.27
June 84.054.020.260.28
July 64.154.030.230.27
August 74.103.820.290.11
September------------
October 63.853.480.520.01
November 73.703.470.520.01
December 5, 20173.853.410.540.01

Although this chart starts a few months later than ideal we can still see how prices went over one marketing year in one location.

My observations from the information above:

  • In February, we could have priced fall corn for $4.10 cash delivery at harvest. This same corn was worth $3.70-$3.85 when harvest was in full swing. A decision we had to act on with December futures at 3.98 and falling.
  • A “put” is downside price protection for producers. In last year’s example; a $4.00 put would have added $0.22 (spent 0.32 and sold for 0.54) to my cash price for those bushels protected.
  • A “call” is for upside price protection for producers. Since corn price did not rise, a call was not rewarded. (spent 0.29 and sold for 0.00).

Are you checking prices for the coming year?

Do you record these prices and explore them?

We can put price protection on some 2018 bushels whenever ready.

What price are you waiting for?

Want to learn more? Check our page for details and to register for grain marketingeducational opportunities the first full week of January 2018.

Upcoming meetings

  • Monday, January 8, 2018 at 12:00 noon: Country Cupboard Restaurant, 101 Hafer Rd, Lewisburg, PA 17837
  • Monday, January 8, 2018 at 6:00 p.m.: Hoss’s Steak and Sea House, 121 Center Rd, Leesport, PA 19533
  • Tuesday, January 9, 2018 at 12:00 noon: Dutch Way Family Restaurant, 365 PA-41, Christiana, PA 17527
  • Tuesday, January 9, 2018 at 6:00 p.m.: Hoss’s Steak and Sea House, 840 N. Hanover St, Elizabethtown, PA 17027
  • Wednesday, January 10, 2018 at 12:00 noon: Hoss’s Steak and Sea House, 1151 Harrisburg Pike, Carlisle, PA

Authors

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