Farm management experts project modestly lower production costs in 2013. The drought has driven 2013 corn and soybean prices to attractive levels. Can past drought-year crops like 1983, 1988 and 1995 help us understand the best time to start pricing grain in the year following the drought?

The severity and early start of this summer’s drought is similar to 1988. The 1983 drought was also severe, but struck later. Both of these years showed that “short crops have long tails” –- the best time to have made sales for 1984 and 1989 was during the price run-up 15 months before harvest (see chart).

Yields in 1995 were a disappointment, but not in the same category as 1983, 1988 or 2012. So why look at 1995/96? Because strong demand and an extremely tight stocks situation in the 1995 crop year remind me of how 2012 differs from 1988 and 1983. The 1995 short crop had no tail -- the best time to price the 1996 crop was in the spring and early summer of 1996.

Tight-stock bulls say “wait for a higher price” and long-tail bears say “price now.” History has fodder for both arguments. Either way, don’t lose sight of the fact that in each of these years, harvest prices in the following year returned to pre-drought levels.