Planning proved better than patience for grain marketing last year. Farmers with marketing plans in place cashed in on early season opportunities, while those who waited for better prices lost.

Late in 1997, Iowan Terry Jones already saw signs that 1998 wouldn't be a banner year for crop prices.

"We make a lot of decisions based on the technicals," says Jones, of Williamsburg. "We saw the December 1998 corn futures price meet steady resistance at $2.98. That signal, along with other indicators, made us afraid of the downside. So when December '98 futures were trading at $2.80, we were sellers."

With soybeans showing similar signs of weakness, Jones started selling his 1998 bean crop in November 1997, also. He kept selling right through December and into February when he was 100% sold on his '98 production.

"We ended up averaging a futures price of $2.86 for corn and $6.80 for beans," he says. "Too many people look at marketing as a right or wrong decision. It's just not that simple. If you know your breakeven and take advantage of market opportunities, who cares if the market ends up going higher. You're still in business."

Jones focuses on gross income per acre rather than on price per bushel.

"That takes a lot of emotion out of selling," he says. "In this area, we figure the market is generally going to give us roughly $350/acre. If we grow 100-bu corn, we're going to see corn in the $3.50 range. In years where yields top out above 200 bu, the market drops and we'll still end up with about $350 gross/acre. When I could lock in corn at $2.80, I was generating close to $450/acre with good yields."

Professional grain marketers can tell you the difference between marketing plans that work and those that don't.

"A marketing plan based on price management will be successful year in and year out," says Luke Hickey, Advance Trading, Bloomington, IL. "A marketing plan based on price prediction will be volatile and actually add risk. Our premise is we don't know what the market is going to do. We want a marketing plan that has flexibility to take advantage of volatility."

Glen Ludwig, grain manager for Hintzsche Grain, Maple Park, IL, doesn't even talk about price outlook. "Outlooks and price forecasts are a dime a dozen. We zero in on marketing programs and get farmers to recognize the importance of risk management."

The 1998 markets provided a "teachable moment," according to Ludwig.

"We could never get farmers attention before," he says. "We work with more than 200 farmers, and probably only 10-15% of them have written marketing plans. The percent of those who actually execute their marketing plans is even less."

Dale Gommel, Dekalb, IL, still has painful memories of the years he farmed without a marketing plan in place.

"I got caught in 1992 and 1993 without a good plan," Gommel recalls. "I was expanding farm acres and took a good beating. You just can't afford to not have something laid out.

"When prices reach my breakeven, I start to sell," he reports. "In fact, if the markets don't look good, I consider selling if I can get within a dime below my actual costs. I usually start selling next year's crop at harvest using cash contracts. By April 1, I want to have one-third of my production priced. I look to cover another one-third with options to set a floor price. I leave one-third of the crop open through pollination. If it still looks good, I start to sell again," he adds.

Following that program last year, Gommel netted $3/bu on high-oil corn.

"That includes the cash price, LDP (loan deficiency payment) and high-oil premium," he says. "It's pretty hard to not make money that way."

High yields brought Gommel's averages down on field corn and soybeans.

"I was hoping to average $2.50 on corn and $6.20 on beans," he says. "But my yields were higher than I predicted, and when I sold the extra grain on the spot market, it brought my averages down to $2.24 and $5.80."

Gommel says he'd rather sell on the spot market and take a price beating than put his grain in storage.

"I don't want to get caught with grain. I don't want the emotional ties," he says. "I've got 40,000 bu of storage that's going to stay empty. I don't have to worry about shrink, and I don't have to manage the grain."

The same storage philosophy keeps beans out of the bins for Richard Bohaty, Seward, NE.

"We don't like to store beans because the shrink is more than for corn," says Bohaty. "So we get them marketed ahead of harvest.

"I watch the price cycles and have seen them work consistently in beans," he continues. "After harvest I start watching the May and July contracts for the next November's beans. I usually want to have 20-25% of the beans sold before we plant. By harvest, I'm usually 50-60% sold, and then I clean up the rest in December."

Beans that aren't sold by harvest go straight to the elevator anyway.

"In most years you can expect a 50-80 cents rally over the harvest lows at the end of November or first week in December," Bohaty says.

Last year's low prices kept him from marketing as aggressively as he normally does.

"We didn't market any beans until early July, when I sold about 30% of my production at $6.10. With the LDP I ended up netting close to $6.40. We stored beans at harvest, waited for the late November rally and picked up another 75 cents over the harvest lows.

"I'm not too proud of what we did with corn," Bohaty admits. "It's in on-farm storage and we'll wait and see what the market does."

Selling beans and storing corn fits Bohaty's cash-flow needs. Bean sales cover his year-end cash needs and late-winter corn sales can be timed for spring cash-flow demands.

Bohaty and Gommel both use Crop Revenue Coverage (CRC) insurance as part of their marketing programs. CRC provides revenue protection so farmers can forward contract crops with the confidence that they will have the cash to replace it if they have low yields.

"I have it on corn and soybeans," says Gommel. In 1998, it paid on corn but not on beans.

"CRC has been a godsend," adds Bohaty. "I can figure how many bushels are protected and make sales accordingly."

With today's narrow margins, you need to take advantage of any program that helps you lock in a profit, says Gommel. In his case, that means using a local grain company's marketing pool.

"Too many farmers are afraid to let someone else be involved in their businesses," Gommel says. "A grain company has access to so much more information. You don't even hear that much about what's going on in the U.S. markets anymore. The news is Russia, the Pacific Rim, Brazil and Argentina. And my time is limited. I have too much other stuff to do to keep up with it all."

Working with a grain company can help prevent marketing mishaps that make poor prices even worse.

"We see a lot of cases where farmers took the LDP on their corn but didn't sell. They figured prices had to go up," says Blue Valley Co-op grain manager Charles Gabehart, Tamora, NE. "We call it the redeem-and- dream option. The government program is set up so nobody in our county should ever have to take less than $1.82 for corn. But some guys have managed to do it."

Glen Ludwig has a somber message for farmers without solid marketing plans.

"The people who learn how to market are going to grow and gobble up the land of those who haven't," he says. "Your ability to grow, or even stay in business, is going to depend on how good a marketer you are."