Farm Finance · March 2025 · 6 min read
Selling grain at harvest when everyone else is selling often means accepting the lowest prices of the year. A disciplined marketing plan that uses forward contracts and basis knowledge spreads sales across the calendar and captures better average prices.
Basis is the difference between your local cash price and the nearby futures contract price, reflecting transportation costs, local supply and demand, and storage availability. Tracking basis at your elevator over multiple years reveals seasonal patterns you can use to time sales. A narrowing basis—where local prices gain on futures—signals a good time to price grain locally.
Forward contracts lock in a cash price for a specific quantity and delivery period before harvest, removing price risk on that portion of your crop. Most advisors recommend pricing no more than a third of expected production before planting to guard against production shortfalls. Incrementally adding contracts as prices reach profitable levels builds an average price above the harvest low.
Start by calculating your cost of production to know the price floor needed for profitability. Set target prices at intervals above breakeven and commit a percentage of expected bushels at each level. Review the plan monthly and adjust for yield changes, market fundamentals, and basis movement.
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