Post-Harvest Grain Marketing: Comparing Observed Prices and Marketing Outcomes

For farmers to profit from post-harvest grain marketing, the price they receive after harvest must exceed the price they could have earned for harvest-time delivery by more than the cost of storage. Evaluating these marketing gains is complicated. Because farms can forward sell grain for delivery at almost any future date, the price received is not necessarily the cash price on the day delivery occurs. In this article, I examine the post-harvest marketing performance for corn and soybeans using farm-level data on realized grain sales from Illinois Farm Business Farm Management (FBFM). I consider the distribution of marketing gains by comparing the price a farm receives post-harvest to the price received for near-to-harvest sales by the same farm in the same marketing year. This is a measure of the realized gross returns to post-harvest grain marketing. In a previous article (farmdoc daily January 5, 2024), I presented a summary measure of the distribution of gross returns to post-harvest grain marketing across farms over a 17-year period. Farms realize gross returns that are on average roughly consistent with post-harvest seasonal price appreciation, but the range of possible marketing gains is wide, and farms often realize negative gross returns. In this article, I unpack this aggregated result by comparing year-by-year marketing performance to concurrent within-year price changes. The range of marketing outcomes is wide, and some proportion of farms realize post-harvest grain marketing losses in all years. Gross returns to post-harvest marketing are correlated with observed seasonal cash price changes. This implies the use of forward contracting is limited, particularly for post-harvest grain marketing. Note this analysis ignores storage costs inherent in post-harvest grain marketing which are significant relative to observed returns. Since storage costs are not zero, the net returns from post-harvest grain marketing must be lower than the gross returns. My results suggest farms should actively consider marketing grain before harvest, both to avoid storage costs and realize higher average prices. In addition, farms may be able to capture post-harvest marketing gains that reduce price risk using forward contracted sales for post-harvest delivery. Forward sales, both pre- and post-harvest, are useful tools in the farm’s price risk management toolbox. However, the range of observed results also suggests it is unrealistic to expect a given marketing strategy to outperform in all market conditions.