CIH’s Margin Watch newsletter uses a typical central Illinois farm model to show producers forward opportunities. An example of corn margins uses University of Illinois data that currently projects average yields at 183 bushels per acre with estimated non-land operating cost at $573 per acre and land cost at $240 per acre, McPherson says. They also account for new-crop basis, which as of mid-July was offered at 13¢-under the December 2013 futures contract.

That data is used for CIH’s Margin Watch newsletter calculation, which is a more generic benchmark. However, in its crop margin consulting service, CIH shows a producer his forward margin opportunities based on a model built specifically for his farm operation incorporating user-defined variables.

Using these figures and measuring December 2013 corn futures at about $4.90 per bushel in late July, the margin was about 28¢ over production costs, McPherson says, compared to a $2-plus profit margin last fall and into January.

Soybean margins were a little higher. Using the same Illinois farm scenario, average bean yield is 53 bushels per acre, non-land operating cost is $373 per acre and land cost is about $240 per acre. The forward basis offer at the time was 17¢-under the November 2013 futures contract. With November 2013 soybean futures at about $12.80, the margin was about $1.50 over production costs, at the 40th percentile of the past 10 years.

As with corn, actual margin calculation is based on a soybean model built specifically for a particular farm and farmer.

Norton takes a conservative approach in crop sales. And he’s loyal to revenue protection insurance. “We’re usually in the 75-85% range in coverage,” he says. “We always consider that when I discuss margins with Gavin. Every week we look at where we are, what opportunities are there for further sales or storage, then analyze what might work best for me.”

With price pressure sending new-crop corn quickly below $5, there are fears $4 can only be nearby. That signals storing unsold grain, or backing up sales with call options to capitalize on price rallies, McPherson says.

“My function is to make the farmer-client accountable, to realize where things are and to have them make a decision,” he says. “If you’re not selling today (with lower prices), you should be in a protection mode.”