1. Let’s Talk about Agricultural Marketing
Ag Credit School
Ames, Iowa
June 4, 2015
Chad Hart
Associate Professor/Crop Markets Specialist 1 1

2. Marketing
A series of events and services to create, modify, and transport a product from initial creation to consumption
Possible steps:
Market participants:
Planning
Storage
Production
Processing
Inspection
Sale
Transport
Producers
Banks
Elevators
Insurance companies
Processors
Transport companies
Traders
Feeders

3. Marketing Tools
There are 4 basic tools that cover most crop marketing moves, and usually the move is a combination of these tools.
Cash Sales
Futures
Forward Contracts
Options

4. Marketing Targets
Successful marketing can be defined in many ways, but some targets are more meaningful than others.
Highest Price
Long-term Profitability
Covering Expenses

5. Ag Decision Maker

6. Fact Sheets, Spreadsheets, & More

7. Iowa Commodity Challenge

8. Iowa Farm Outlook
www2.econ.iastate.edu/ifo/

9. Grain Marketing E-Course

10. ISU Farm Management Specialists

11. Market Fundamentals
Data examining the balance between crop supplies and crop demands
When demand is relatively stronger, price rise
When supply is relatively stronger, price fall

12. Crop Supplies

13. Crop Demands

14. USDA Data Reports World Ag Supply and Demand Estimates
Crop Production Crop Progress
Prospective Plantings Acreage
Grain Stocks

15. Seasonal Patterns
A price pattern that repeats itself with some degree of accuracy year after year.
Often sound reasons for the patterns
Supply and demand timing
Linked to storage cost or basis patterns

16. Crop Price Seasonal Patterns
Source: USDA, NASS,
Monthly Price Data

17. Iowa Corn Prices vs. Costs

18. Iowa Soybean Prices vs. Costs

19. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34
Source: CBOT, Futures Price for 2nd Friday of the month

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

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

22. Average Price Captured
Harvest
2000
1.66
2001
1.69
2002
2.29
2003
1.88
2004
1.73
2005
1.48
2006
2.69
2007
3.02
2008
3.69
2009
3.47
2010
5.04
2011
6.10
2012
7.42
2013
4.30
2014
2.96
Average
3.29
Min
Max

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

24. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34

25. Average Price Captured
Harvest
Averaging
2000
1.66
1.91
2001
1.69
1.87
2002
2.29
2.11
2003
1.88
2.05
2004
1.73
2.24
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
2008
3.69
5.13
2009
3.47
3.77
2010
5.04
3.84
2011
6.10
6.02
2012
7.42
6.17
2013
4.30
5.08
2014
2.96
3.85
Average
3.29
3.42
Min
Max

26. 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

27. Costs of Production Cost Cost + 0.25 Cost + 0.50 2000 2.43 2.68 2.93
2001
2.56
2.81
3.06
2002
2.55
2.80
3.05
2003
2.42
2.67
2.92
2004
2.58
2.83
3.08
2005
2.79
3.04
3.29
2006
2.86
3.11
3.36
2007
3.54
2008
3.63
3.88
4.13
2009
4.43
4.68
4.93
2010
3.48
3.73
3.98
2011
3.99
4.24
4.49
2012
4.40
4.65
4.90
2013
4.46
4.71
4.96
2014

28. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34

29. Average Price Captured
Harvest
Averaging
Price Target
2000
1.66
1.91
1.76
2001
1.69
1.87
2002
2.29
2.11
2.31
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
3.11
2008
3.69
5.13
4.16
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
2011
6.10
6.02
5.25
2012
7.42
6.17
5.97
2013
4.30
5.08
5.63
2014
2.96
3.85
4.00
Average
3.29
3.42
3.33
Min
Max

30. 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

31. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34

32. Average Price Captured
Harvest
Averaging
Price Target
Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2005
1.48
2006
2.69
2.35
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Average
3.29
3.42
3.33
3.41
Min
Max

33. 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

34. Dec. Corn Futures Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
2000
2.34
2.28
2.49
2.52
2.53
2.64
2.40
1.94
1.87
1.96
2.08
2001
2.54
2.45
2.47
2.16
2.37
2.24
2.09
2002
2.46
2.39
2.31
2.30
2.19
2.22
2.26
2.33
2.62
2.76
2003
2.41
2.38
2.50
2.42
2.11
2.14
2004
2.48
2.81
2.95
3.11
2.85
2.80
2.07
2005
2.29
2.04
2006
2.43
2.57
2.63
2.71
2.82
2.68
2.77
3.15
2007
3.45
3.50
3.95
3.99
4.08
3.75
3.92
3.69
3.51
3.49
2008
4.32
4.51
5.13
5.30
5.75
6.04
6.50
7.65
6.29
5.18
5.63
4.03
2009
4.43
4.20
4.54
4.06
4.18
4.07
4.40
4.48
3.32
3.28
3.20
3.72
2010
4.37
4.38
3.97
3.94
3.80
3.71
4.27
4.78
2011
5.09
5.29
5.71
6.18
5.78
6.53
6.27
7.13
6.37
7.15
7.37
6.40
2012
5.74
5.52
5.55
5.60
5.37
5.05
5.44
7.40
8.09
7.82
7.51
2013
6.30
6.28
5.77
5.47
5.50
5.33
4.53
4.59
4.33
2014
4.69
4.58
4.60
4.87
4.99
3.79
3.64
3.39
3.34

35. Average Price Captured
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Average
3.29
3.42
3.33
3.41
3.34
Min
Max

36. Extended Time and Price
Lowest Average
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Lowest
out of
15 years 10 2 3 6 4

37. Extended Time and Price
Highest Average
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
2000
1.66
1.91
1.76
2.02
2001
1.69
1.87
2002
2.29
2.11
2.31
2.35
2003
1.88
2.05
1.96
2004
1.73
2.24
2.40
2.41
2.33
2005
1.48
2006
2.69
2007
3.02
3.27
3.11
3.28
2008
3.69
5.13
4.16
5.24
2009
3.47
3.77
3.68
2010
5.04
3.84
3.87
3.74
2011
6.10
6.02
5.25
5.94
2012
7.42
6.17
5.97
5.80
2013
4.30
5.08
5.63
5.12
2014
2.96
3.85
4.00
4.17
Highest
out of
15 years 4 2 6

38. Extended Time and Price
Longer History
Harvest
Averaging
Price Target
Time and Price
Extended Time and Price
Average
2.59
2.70
2.65
2.66
Min
1.14
1.41
Max
7.42
6.17
5.97
5.94
Low Price 25 8 4 11 9
High Price 10 16
Out of 39 years ( )

39. Iowa Corn Prices vs. Costs

40. Iowa Soybean Prices vs. Costs

41. Thank you for your time. Any questions. My web site: http://www. econ
Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: