Before combines roll across fields this fall, farmers are eyeing critical marketing decisions that extend far beyond the simple act of selling grain straight off the combine.
The first question many farmers consider is whether to just store and wait for a higher price — especially this year, when some prognosticators are foretelling rallies in the first quarter of 2027.
AgMarket.Net’s Tyler Schau says that’s a question that can only be answered with the responses to farm-specific questions. “What storage do you have available? Do you have bin space? Do you have a bagger? And maybe it’s even labor and equipment availability that determines what you can or can’t do,” Schau said in an appearance on this week’s Ag Marketing IQ In Depth.
Schau, a former ag economics professor, provided in-depth explanations of a few tools for farmers to consider as they create a strategy for selling their crop:
Understand cash sales: Spot vs. forward. Farmers who want to move grain immediately can make spot cash sales, where price and delivery happen simultaneously when the truck drops off the load. But Schau emphasized that cash sales come in two forms.
“The second cash contract is your forward contract, and really, all you’re doing out there is spreading out the time between when you set the price, your pricing date and when your delivery occurs,” he explained. Forward contracts allow farmers to lock in a price today on bushels they can store and convert to cash later.
Futures contracts: The price of flexibility. Futures sales split marketing decisions into three parts: pricing today, delivering later and deciding when to set basis. The difference between a futures contract and a forward contract is the timing for locking in the futures price and basis simultaneously. Both are locked in when the forward contract is signed. Not so with a futures contract.
“Taking a futures position adds into a little more flexibility, gives you a few more places to go as far as delivery-wise and just kind of frees up your flexibility,” Schau said.
The trade-off? Farmers must maintain a margin account and could face a margin call during a market rally.
Put options: Insurance without margin calls. For risk-averse farmers uncomfortable with margin calls, put options offer price protection while maintaining upside potential.
“If you’re buying put options, you’re basically buying a floor, keeping the top open. A put is price insurance. You pay a premium, you get a price floor,” Schau explained.
Put options eliminate margin calls, but farmers pay a premium. Key decisions include determining the expiration — or length — of the put, and deciding when to buy it and when to exercise it.
“There is an expiration date. So, the protection is going to wear off at some point, which means you still have to sell the crop at some point,” he said.
He described this common scenario: Farmers buy puts, the market rallies, they view the premium as wasted money, the option expires worthless, but they never actually sell the grain. Then the market falls back down.
Actionable advice for this harvest
Schau recommended farmers consider put options this fall, given current market conditions. Demand for U.S. grains — especially corn and soybeans — remains strong, partly fueled by low commodity prices over recent years and higher energy prices.
“There is a scenario where we could see sustained price rallies or some higher prices, but a lot of those things could change on a dime,” he said.
His advice: Create an action plan before harvest pressure hits. Decide which marketing tool you’re using, understand its limitations, and commit to taking action when market conditions warrant — not just when the combine reaches the end of the field.
For more detailed information on these marketing tools and how to put them to work in a grain marketing plan, watch this week’s Ag Marketing IQ In Depth with special guest Tyler Schau.