Agricultural Marketing ECON 337: Agricultural Marketing Lee Schulz Assistant Professor lschulz@iastate.edu 515-294-3356 Chad Hart Associate Professor chart@iastate.edu 515-294-9911 1

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Basis Harvest basis from December corn futures for average cash prices for Iowa corn on the 2nd Friday of October, in $/bushel.

Marketing Types Harvest Averaging Price Target Time and Price Extended Time and Price

Marketing Types Harvest Takes the harvest price for 100% of their grain

Average Price Captured

Marketing Types Averaging Sells 10% of their grain via futures each month January-July Sells the remaining 30% at harvest Sets basis at harvest

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Average Price Captured

Marketing Types Price Target Sells 25% of grain via futures when futures price > production cost Sells 25% when futures > costs + $0.25 Sells 25% when futures > costs + $0.50 Sells remaining 25% at harvest Sets basis at harvest Defaults to harvest sales when price objectives are not reached Will start selling in the November before planting

Costs of Production Source: Iowa State University Extension, Dr. Michael Duffy

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Average Price Captured

Marketing Types Time and Price Sell 25% in March Sell 25% in April Sell 25% in May Sell 25% at harvest Sets basis at harvest Only make March-May sales if futures prices > production costs Defaults to harvest sales if price objectives are not reached

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Average Price Captured

Marketing Types Extended Time and Price Sell 25% in March or when futures prices > production costs Sell 25% in April or when futures prices > costs + $0.25 Sell 25% in May or when futures prices > costs + $0.50 Only make March-May sales if futures prices > costs Sell remaining crop at harvest Sets basis at harvest Defaults to harvest sales if price objectives are not reached

Dec. Corn Futures Source: CBOT, Futures Price for 2nd Friday of the month

Average Price Captured

Lowest Average

Highest Average

Longer History

Class web site: Have a great weekend. http://www.econ.iastate.edu/~chart/Classes/econ337/Spring2013/ Have a great weekend.