If you don't have a plan, then plan to fail. That paraphrase of an old cliché can easily apply to the process of selling corn and soybeans.

Each grower and his or her family have different situations: expected crop yields and quality, whether land is owned or rented, the acres involved, fixed and variable inputs, on-farm storage capacity, if college tuition starts next year, if a new pickup is needed, do you plan scaled out deliveries or work on a set O-N-D (October-November-December) plan and on and on.

If at all possible, pin down your breakeven price to within a few cents/bu. Determine the level of profit best for your situation, and of course, what will satisfy your lender or landlord.

The Corn And Soybean Digest's MarketMaxx Web site at www.MarketMaxx.net has information on how to write a marketing plan, whether it's for your individual farm or as a practice plan when playing the MarketMaxx corn and soybean marketing games. Kevin McNew of Cash Grain Bids, Inc., Bozeman, MT, manages the site. He has a section that provides details about a marketing plan.

The marketing plan usually consists of three main components:

  1. Marketing Actions — written instructions that spell out what trading activities you will perform if the market moves the way you expect.

  2. Default Actions — think of these as your back-up plan if the market doesn't move in your favor. What trading actions will you make?

  3. Time Period — The month/year that the marketing actions and default actions are in effect.

Examples of marketing plans written by University of Minnesota (U of M) grain marketing economist Ed Usset indicate that marketing should start early. A marketing plan for 2006 corn and soybeans should have probably been written a year or more ago. So sit down at the kitchen table tonight to start on your 2007 plan.

Usset writes a marketing plan for a mythical corn and soybean farm every year. He posts it on the U of M Center for Farm Financial Management Web site, www.cffm.umn.edu/publications. They go back to 2001.

His 2007 corn plan was actually implemented last spring, when attractive 2007 corn futures prices provided good sale opportunities. Sales are scheduled to continue through early summer 2007. That's when he plans to have at least 75% of his crop marketed, as in past years.

Usset normally sets lofty pricing goals. For corn, he uses an expected production of 85,000 bu., based on 600 acres averaging 145 bu./acre. “I buy crop insurance to protect my production risk and have 75% of my anticipated corn crop priced by early June,” he says, noting that his projected basis is 40-50¢-under futures.

A breakdown of his initial 2007 plan is as follows:

  • Price 10,000 bu. at $2.10 cash price by early January 2007, using forward contract/futures hedge/futures fixed contract. That price was achieved March 24, 2006, when December '07 futures hit $2.71.

  • Price 10,000 bu. at $2.22 cash or market by March 24, 2007. That price was achieved on April 7, 2006, when December '07 futures hit $2.88¼.

  • Price 10,000 bu. at $2.34 cash or market by April 2, 2007. That price was achieved on April 28, 2006, when December '07 futures hit $2.95½.

  • Price 15,000 bu. at $2.46 cash or market by April 17, 2007. The pricing tool to be determined.

  • Price 10,000 bu. at $2.58 cash or market by May 2, 2007. The pricing tool to be determined.

  • Price the last 10,000 bu. at $2.70 cash or market by June 1, 2007. The pricing tool to be determined.

Usset's earlier than set sales were made at a 20¢ premium to price targets noted above. If prices are lower than $2.10 local cash price based on $2.60 December futures, he recommends ignoring decision dates and making no sales.

His 2006 corn marketing plan, using crop insurance and having 75% of his anticipated corn base marketed by late May, was as follows:

  • Price 10,000 bu. at $2.10 cash price. That price was achieved on Jan. 3, 2006, when December '06 futures were at $2.51½.

  • Price 10,000 bu. at $2.22 cash or market by March 29, 2006, using some form of fixed-price contract. That price was achieved on Feb. 24, 2006, when December '06 futures hit $2.64¼.

  • Price 10,000 bu. at $2.34 cash or market by April 7, 2006, using some form of fixed-price contract. That corn was marketed on April 7, 2006, when December '06 futures hit $2.74½.

  • Price 15,000 bu. at $2.46 cash or market by April 27, 2006, consider options or a trend system. That corn was marketed on April 27, 2006, when December '06 futures were at $2.66.

  • Price 10,000 bu. at $2.58 cash or market by May 13, 2006, consider options or a trend system. That corn was marketed on May 12, 2006, when December '06 corn futures were at $2.81¾.

  • Price the last 10,000 bu. at $2.70 cash or market by May 27, 2006, consider options or a trend system. Those sales were when December '06 futures were at $2.79.

Several 2006 sales were made below his initial goal, but above his $2.10 cash limit. But he still did well.

“I'm 75% sold on my 2006 crop at an average December futures price of $2.69, or a cash price of about $2.10-2.20,” says Usset.

His simulated 2007 soybean marketing plan uses expected production of 23,000 bu., based on 530 acres at 43 bu./acre. He again has crop insurance to protect his production risk and plans to have 75% of the anticipated crop priced by early June. He figures in a basis of 40-50¢-under futures.

His 2007 soybean marketing plan is as follows:

  • Price 2,500 bu. at $5.25/bu. cash price in early January 2007, using some form of fixed-price contract: forward contract, hedge-to-arrive, sell futures, etc.

  • Price 2,500 bu. at $5.50 cash or market by March 15, 2007, pricing tool to be determined.

  • Price 2,500 bu. at $5.75 cash or market by April 2, 2007, pricing tool to be determined.

  • Price 2,500 bu. at $6 cash or market by April 17, 2007, pricing tool to be determined.

  • Price 2,500 bu. at $6.25 cash or market by May 2, 2007, pricing tool to be determined.

  • Price 2,500 bu. at $6.50 cash or market by May 16, 2007, pricing tool to be determined.

  • Price final 2,500 bu. at $6.75 cash or market by June 1, 2007, pricing tool to be determined.

Usset says that if prices are lower than $5.25 local cash price based on $5.75 November '07 futures, ignore decision dates and make no sales.

His 2006 soybean marketing plan had similar goals. “I had about 75% sold on my 2006 crop at an average November futures price of $6.29, or a cash price of $5.75-5.85,” he says.

In each plan, Usset's strategy took advantage of good prices early. And although they are simulated plans, they are plans that would have generated good prices for a grower using the same plan in a similar sized operation.

Following a similar plan, plugging in your own corn and soybean pricing goals, should produce profits. Even if it's scribbled on the back page of a seed company note pad, any marketing plan that has meaningful pricing goals, dates to market and default strategies should have you on a better path.

Otherwise, you can plan to fail.