In today’s grain markets, volatility is no longer a surprise: It’s the norm. Weather swings, geopolitical shifts, biofuel policy debates and global supply dynamics can quickly move corn and soybean prices in either direction. That’s why executing a thoughtful marketing strategy—one that goes beyond simply “hoping for better prices”—is essential.
Two tools that continue to prove their value for row-crop producers are futures and options. Used correctly, they can help secure profit margins, manage downside risk, and keep upside opportunity on the table.
Below, we break down how these tools work and the practical ways farmers use them to market their grain more effectively.
Why use futures and options?
Your goal isn’t just to grow a crop, it’s to profit from it. Futures and options give you the ability to:
- Lock in favorable prices when the market offers them
- Manage downside price risk during uncertain weather or economic periods
- Set floors without capping the upside (when using certain option strategies)
- Improve cash-flow predictability for land rents, input costs, and loan payments
- Add discipline to your marketing plan rather than reacting emotionally
Think of these tools as financial yield insurance. You’re not gambling. You’re protecting your investment.
Using futures (hedge to arrive contracts)
Simple, direct and effective.
- What it is: A short hedge (selling futures via an HTA contract) is one of the most straightforward strategies for grain producers.
- How it works: You sell corn or soybean futures to your local grain elevator, feed mill, ethanol plant, etc., to lock in a price. Later, you lock in the basis to establish your final cash price.
- When it works well: When futures prices are near profitable levels, when you expect basis to improve into delivery periods (common in many regions), when you want certainty about a portion of your revenue
- Benefits: Locks in the futures portion of your price. Allows you to capitalize on basis improvement. Can be lifted anytime, which provides high flexibility.
- Drawbacks: Upside risk in the market after you sell. To mitigate that, HTAs can be defended with call options to remain in the market for a period of time.
Many producers hedge 20 to 50% of expected production early in the year when futures prices tend to reflect weather risk premiums.
Put options: Setting a floor while keeping the ceiling
A put option gives you the right—but not the obligation—to sell futures at a predetermined price (the strike price).
- Why farmers like them: They create a price floor, keep upside open, don’t have margin calls and are good for uncertain yield situations because you are not “priced in” on grain you may not produce.
- When to buy puts: When seasonal rallies occur (typically spring/early summer), ahead of major market-moving reports, or when volatility is low and option premiums are cheaper
- Practical example: Buy a $4.40 December 2026 corn put for $0.20. Your floor is roughly $4.20 (strike – premium). If the market collapses to $3.80, your put gains value and protects revenue.
Call options: Re-owning grain on paper
After you make cash sales, especially during harvest lows, you may still want upside exposure. That’s where call options shine.
How re-ownership works:
- Make a strong basis cash sale at harvest to free up storage space or reduce shrink/drying costs
- Use a small portion of the proceeds to buy calls
- If futures rally later, the call increases in value
You’ve essentially “re-owned” the grain without tying up bins or taking on margin risk.
Blending tools into a season-long marketing plan
The most successful grain marketing plans aren’t built on one strategy. They use a portfolio approach:
Pre-planting to early growing season
- Sell HTAs on a portion of expected production and defend with calls
- Buy puts to secure a floor on another portion
- Look for seasonal rallies to incrementally price grain
Mid-season to pre-harvest
- Evaluate basis to determine whether pre-harvest cash contracts make sense
Harvest
- Tight basis? Consider cash sales + call options
- Weak basis? Consider storing and hedging futures
Post-harvest
- Monitor basis improvement opportunities
- Use calls to manage upside exposure on sold grain
A disciplined, layered approach removes emotion from marketing and helps ensure your best—and worst—prices aren’t determined by chance.
Final thoughts: Markets reward prepared producers
Marketing corn and soybeans with futures and options isn’t about predicting the market. It’s about managing it.
Use:
- Futures to lock in profitable prices
- Puts to protect against downside
- Calls to maintain upside on sold grain
The key is to build a marketing plan that works in bull markets, bear markets and everything in between to always be positioned for higher prices.
If volatility is here to stay (and history suggests it is), then these financial tools are some of the most reliable ways to protect your farm’s bottom line.