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Effective Agricultural Marketing Strategies for Iowa Corn Farmers

Learn about various marketing types such as Harvest, Averaging, Price Target, and Extended Time and Price to optimize profits in corn farming. Understand cost of production and futures prices to make informed decisions. Explore real case studies and expert advice.

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Effective Agricultural Marketing Strategies for Iowa Corn Farmers

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

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

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

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

  5. Marketing Types • Harvest • Averaging • Price Target • Time and Price • Extended Time and Price

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

  7. Average Price Captured

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

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

  10. Average Price Captured

  11. 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

  12. Costs of Production Source: Iowa State University Extension

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

  14. Average Price Captured

  15. 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

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

  17. Average Price Captured

  18. 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

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

  20. Average Price Captured

  21. Lowest Average

  22. Highest Average

  23. Longer History

  24. Class web site: http://www2.econ.iastate.edu/faculty/hart/Classes/econ337/Spring2019/

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