When is it too early to market your 2027 crop?
Depending on location, the planting season for the 2026 crop is all over the place. We have talked with people who finished planting corn and soybeans in the first half of April, people who fought on and off throughout May, and others who are waiting for it to dry up to finish at the end of June.
With the headaches many have experienced, marketing has been put on the back burner.
During the first half of May, we pushed clients to make sales and grab options for their upcoming crop. At the same time, we started to have some conversations about the 2027 crop. This usually was met with a question: “Isn’t it too early to worry about that?”
A lot of operations market one year at a time. They may forward-price a bit before planting, do more in the summer, and then finish the bulk of their marketing after harvest. Some years that may work out, but in years when the world has ample supplies, the earliest sales are usually the best.
What if we took some price risk off the table a year to 18 months ahead of time? December 2027 corn futures sat above $5 for roughly three weeks this spring, and November 2027 bean futures were above $11.50.
Below is a graph showing what percentile of price $5 corn would be in over the last one, three, five, 10 and 15 years. Definitely above average!
I understand being hesitant with all the unknowns: input prices, this year’s crop, South American production and next year’s growing season, just to name a few. However, selling 10% to 20% is unlikely to be a huge mistake. Doing a hedge-to-arrive contract with your favorite elevator, selling futures in your own brokerage account or making a straight cash sale are all ways to help you take advantage of attractive prices far out.
Another strategy we use with options that far out is a three-way position. Let’s look at an example of this on soybeans:
On May 4, we were at $11.50 futures. At that time, a $10.40-$11.40-$13 November 2027 three-way position cost 15 cents. You create this by selling a $10.40 put, buying an $11.40 put and selling a $13 call. This strategy provides you with a dollar of downside protection with $1.50 of upside potential. Short options carry margin risk, but the protection you are provided along with the flexibility makes it worth it, in my opinion.
This position would expire at the end of October 2027, so there’s plenty of time to manage it through future volatility. The chart below illustrates what the net price (blue line) of this position would be at different future levels (red line).
Looking back, it doesn’t take a genius to say making sales in the beginning of May was a good idea. Prices could have easily gone up $1 since then, and your sales and positions would be below the market. Even if that were the case, would a $5 sale be the worst thing? Would a soybean three-way break the farm?
I’d argue it’s never too early to make sales and put on positions for your future crops.
As long as you continue to plan to farm, you have price risk. Your job is to limit that risk and pull the trigger at profitable levels. Increase your chances of profitable sales by expanding your marketing window and starting early.
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