Still dreaming about $5 corn? What about $4? Even $3?

Don't hold your breath. “In the last 25 years, the December corn futures contract has hit $3.50/bu or higher only six times,” says Steve Klee, grain merchandiser for Sunray Co-op, Sunray, TX. “It has topped $3 only 15 times, and when it did, most producers still didn't sell.”

With odds like those in the slim-to-none category, Klee encourages growers to jump at the chance to lock in any new crop price that surpasses the $2.60-2.70 level.

Bob Wisner, Iowa State University grain marketing economist, adds that early forward contracting historically has had a high probability of paying off.

David Meyer has heeded that advice. For Meyer, it's a virtual guarantee he will lock in $2.60 when it is available. And $2.70 is a no-brainer.

Rick Rousser has a similar approach. Both had much of their 2002 corn crop forward contracted with their country elevators at virtually the instant December '02 futures topped $2.60.

Meyer and Rousser both farm in the Texas Panhandle, where corn acres were down in 2001 due to anticipated high irrigation costs and continued low corn prices. But armed with strong groundwater sources, both felt corn still offered the best opportunity to turn a profit, especially if they could lock in high prices.

Meyer, who farms out of Stratford, TX, has used early forward contacting the past three years. He has sold his corn for a $2.55-2.75 price at delivery each year. Add to that an LDP in the 15-20¢ range, and he has approached $3 or higher in years when the harvest cash price was more like $2.

“I will take $2.65 or $2.70 any time,” says Meyer. “There are only a few times you will ever have the opportunity to see that price level.”

Going out on a limb more than a year in advance doesn't bother him. In fact, he sleeps a lot better knowing he has most of the next year's crop sold at a high price before he has his current crop even in the ground, much less in the tassel stage.

“Between January and March ('01), I forward contracted to deliver '02 corn at $2.65 in two separate contracts with local elevators,” says Meyer. “I added another contract at $2.55 in July.”

In each case, December futures had sharp spikes he knew would cut out a profit for him. He did the same thing for '01, booking $2.65 and $2.70 delivery contracts way back in March '00.

Rousser's attitude is that “in eight out of 10 years, it will pay you to contract corn” for delivery well ahead of harvest.

“I have forward contracted the last five years and have always made money doing it,” says Rousser, who farms near Sunray, TX. “It's great if you can get $2.50 or $2.60 locked in early and collect your LDP on top of that.”

For '02, Rousser contracted with his local elevator on July 11, 12 and 26 of '01. They were straight delivery contracts between $2.62 and $2.65.

For '01, he contracted in March, April and July during futures rallies. And Rousser will deliver some of his 2001 crop corn at $2.75/bu.

Klee sites several reasons why growers should forward contract in advance if the price is right. “Besides having a strong price, it is easier to go to their bankers for financing,” he says. “They know what they will receive, and can compare it to their input costs. That's the reverse of how most people do it.”

Wisner, one of the nation's foremost grain marketing specialists, says timing is important in forward contracting. “In about 82% of the years since 1975, there have been higher prices on December corn futures in the spring than in the Midwestern harvest season,” he says.

“Historically, the best chance for good pricing opportunities has usually come before the middle of June.”

Looking ahead, Wisner says growers should see additional early marketing opportunities for the '02 crop.

“Keep in mind that a 100- to 150-million bushel jump in corn processing demand will be expected as 20 or so new ethanol plants come on stream in late summer and early fall,” he says. “The grain trade will be wanting to see incentives to expand corn plantings next spring. Winter and early spring prices on December '02 futures in the $2.50-2.60 range are possible.”