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You Got to Know When to Hold ‘Em

You Got to Know When to Hold ‘Em

Deciding when to sell a crop is a difficult decision. Producers can sell prior to harvest, at harvest in the fall, or store the crop and sell after the first of the year. There are advantages and disadvantages to each. Many producers wait to market their crop until after the calendar turns. Figures from the Nebraska Corn Board indicate 57 percent of corn harvested in Nebraska is marketed after January 1. Joe Janzen, an agricultural economist with the University of Illinois, says 60 percent of corn and soybeans produced in Illinois remains to be sold at the end of a year.

Janzen explores the pros and cons of holding and selling grain after the first of the year in his paper, Post-harvest Grain Marketing: Do Farmers Reap the Benefits? Farmers’ primary motive for holding grain is better prices. Commodity prices typically rise between January through June and producers hope to capture this gain. Figure 1, from Janzen’s paper, shows the seasonal price variation in cash prices for corn and soybeans in Illinois for crop marketing years 2003-2020. The lows for the marketing year generally occur during harvest with the highs occurring in June or July of the following year. Janzen writes that corn and soybean prices appreciate about 20 percent between October and June or July. While Janzen’s observations are for Illinois, they surely hold for Nebraska too.

Using farm-specific data from the Illinois Farm Business Farm Management Association, Janzen examines the marketing performances of farms who sell corn both prior to January 1 and after January 1. By comparing the prices realized during both periods, a comparison of marketing performance can be made. Janzen was able to gather around 16,000 farm-year marketing observations between 2003-2020 for the analysis.

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Photo Credit: gettyimages-studio2013

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Categories: Nebraska, Crops, Corn, Harvesting

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