“Last year I didn't forward price one bushel of my corn and soybeans, so this year I sold my entire corn and soybean crop ahead. I was wrong last year and now I am wrong again this year.” Those were the first words uttered by a frustrated Iowa farmer in early October 2006. “How can I change what I'm doing?” he asked.

I explained some alternatives he should consider. I also related how, over 20 years ago, I became so frustrated with trading and marketing that I sat down and wrote out a set of marketing-trading rules. My sincere reply to the young farmer is that you can change your results if you change your approach. Develop a series of marketing rules for your farm, and stick with them:

  1. Write out the summary of your grain sales last year. List the date sold, bushels priced, price received, year-to-date average and total dollars you received. Now for the more beneficial part — write out your marketing plan and your revenue goals for next year.

  2. Make incremental sales into the market as it rallies. I used to have customers make two new-crop sales of 20-30% for off-the-combine delivery and then two to three sales of the remaining cash product to try and spread out the risk and hopefully increase the average selling price. With the current fund-driven, more volatile grain markets I now suggest making five new-crop sales of 5-10% and then five cash sales of 10-20%. With wider price swings make more sales and increase your odds of averaging up.

  3. Use price targets. Our company made its first new-crop recommendation when December corn hit $2.68 because historically $2.70 is a difficult level for December corn to rally through. The next price target was hit by mid-October at $3.24. The next target may even be hit by the time you read this — it's at $3.78 for May 2007 Chicago Board of Trade (CBOT) corn futures selling a portion of the 2006 production again. I don't know where the top is, but selling at these price levels will create an excellent profit for most farms.

  4. Use a time plan. In other words, use historic seasonal odds. What if the $3.78 May CBOT price target isn't hit? Then by mid-March another incremental sale will be made. The next key time period is mid-April, so by then cash sales will be at 60% and by the end of June sales will be at 90-100%. The time sales are made if the price targets aren't hit.

  5. Be consistent. The Iowa farmer I mentioned was especially frustrated at making the wrong marketing moves two years in a row. The first 10-20% new-crop sales that we recommended this year were 30¢ below the market at delivery this harvest — kind of painful in 2006. But this same method of making incremental new-crop sales has made a lot of additional money for producers in nine of the last 10 years. So in 2007 I will forward price 10-50% of my new-crop corn and soybean crops again.

  6. Call your offers in. A good plan using both time and price doesn't benefit you if the sales aren't made. Having the resting offers in place lets your grain elevator or terminal work for you. In these volatile fund-driven markets, the best selling opportunities seem to occur on the opening or on the close — but the inter-day rallies are only sold by farmers who have the offers in place.

I've started using these rules in a series of seminars this fall. These seminars help farmers develop a written marketing plan. The best compliment I received at one of the seminars was when one young farmer said, “I like this — it makes me think of my crops like money.” I knew then I was succeeding in changing his approach and increasing his odds for success.

Order Marketing Calendar

At www.kluisnews.com we've created the 2007 Kluis Marketing Calendar. This complete guide to marketing your corn and soybean crop in 2007 uses all of the rules mentioned above. The calendar also provides you with historic price data, seasonal odds, monthly marketing checklists, basis worksheets and market plan worksheets. If you're interested in this go to www.kluisnews.com or call 1-888-345-2855.

Alan Kluis is the president of Northland Commodities LLC, based in the Minneapolis Grain Exchange, Minneapolis, MN. You can contact him at alan@kluisnews.com or call toll free 888-345-2855.