Be guided by your plan, not your emotions, if you want to be successful in marketing your grain. The most dangerous emotions in grain marketing are fear and greed, says Ed Usset, grain marketing specialist with the University of Minnesota Extension Service.

"These emotions can and will affect your selling decisions," says Usset. "Using a consistent trading plan is the only workable strategy to keep from responding to the market emotions of the moment."

An effective plan requires that you know and control your costs, says Usset. "For long-term survival in a commodity market, producers must continually strive to keep production costs low," he points out. "FINPACK is a farm financial software package that can help with this."

FINPACK is available from the University of Minnesota Center for Farm Financial Management, 249 Classroom Office Building, St. Paul MN 55108. A demonstration of FINPACK is on the Internet at www.cffm.umn.edu.

Usset, a member of the Center for Farm Financial Management staff, says treating grain marketing as a year-round task is necessary for success. "In today's environment of increased price volatility, pricing opportunities can develop any time, sometimes well before the crop is harvested," he says.

"Weather scares and new crop uncertainty can push prices higher in a developing crop. Many research studies have shown that pre-harvest pricing strategies that can take advantage of these market bulges are more profitable that post-harvest strategies."

Tools for pricing grain before harvest including the forward contract, futures contract and hedge-to-arrive contract.

Respecting seasonal trends is another key factor in effective marketing. "All commodity prices tend to follow some well-defined patterns throughout the marketing year," says Usset. "While not every year is the same, we can define certain times in the year as better selling opportunities."

To use marketing tools effectively, it's necessary to develop a solid knowledge of cash-futures price relationships, says Usset. The difference between cash and futures prices is commonly known as the "basis."

"The basis for a storable commodity displays a distinct seasonal pattern," says Usset. "With grain stocks and the demand for storage high at harvest, cash prices are often at their largest discount to the futures. As the crop is put away and some is used, the supply of storage increases relative to demand for its use, and the basis narrows.

Astute decision-makers gather a 3-5-year history of their local basis, using daily or weekly data. Many marketing tactics require a knowledge of the basis."