Villwock marketed some 2012 corn early and left $1-$2 per bushel on the table when markets surged during last year’s drought. But a profit was still locked in. “We started pricing 2013 corn at $6.25-6.50 area in 5% increments, in early October 2012, then late November, then in December, with our last sale in early June.”

Options and cash contracts are backed up by USDA Revenue Protection insurance. “We purchase 80% crop insurance protection,” Villwock says. “Many consider this almost like a put. We consider it as another marketing tool. We use crop insurance as a backstop to lost bushels so we can be more aggressive on the cash contract side.”

“We’re always looking for pricing opportunities,” Koester says. “This time of year, we shift to a sell and defend approch. In March, we look at put options.

“Once we get beyond one-third of a crop priced, we like to cover contracts with call options, a ‘drought option’ in case prices start back up.”