Contracts "sound good" - Lenders like contracts and see them as a way to stabilize fluctuating market prices.enders like contracts and see them as a way to stabilize fluctuating market prices.
Contracts make everybody average
Buyers know what market will bear and write contracts accordingly.
In high yielding years, specifications become important for the buyer.
Beware of yield penalty and quality specifications.
Example: Western U.S. Malt Barley

Commodity Markets

Decisions

Finding or choosing a buyer
Delivery to the buyer
Establishing price: when and how (most difficult)

Basis: The difference between the local market cash price and the futures price (cash price - futures price)

almost always negative
"weakest", "largest", "more negative" at harvest in fall or furthest from Chicago
"strongest", "smallest" in the spring

When evaluating pricing tools be aware of basis.

Pricing Tools

Establishing a Price Level

Hedging
Cash sale
Hedged-to-arrive

Establishing a Minimum Price

Put options
Cash contracts
Call options

Retaining Ownership

Store grain
Sell grain and buy a futures contract
Delayed pricing contract

Chicago Board of Trade
The Language of Futures Markets and Options UWEX Bulletin A2913
Principles of Hedging with Futures National Corn Handbook - 47

Alternative markets

Organic Markets

Corn and soybeans grown without pesticides or chemical fertilizers

Contract / Identity Preserved Markets

Blue corn
Hard endosperm: dry milling
High amylose
High lysine
High oil
High oleic
High starch
Low stress: fewer cracks, better storability
Nutritionally dense
Waxy
White food-grade
Yellow food-grade
Non-GMO

Composition of Yellow Dent Corn

Endosperm: 82% of kernel dry weight
Pericarp: outer covering of kernel
Germ: only living part of kernel, 25% of germ is corn oil
Tip cap

What can be extracted from a bushel of corn?

Corn Kernel Components
Starch	61.0%
Feed	19.2%
Oil	3.8%
Water	16.0$

Product choices	Typical Value	Total
32 lbs of starch or	$0.10 per lb	$3.20
33 lbs of sweetener or	$0.225 per lb	$7.42
2.5 gal of fuel-grade ethanol	$1.28 per gal	$3.20
plus
11.4 lbs 20% gluten feed	$120.50 per ton	$0.68
3 lbs of 60% gluten meal	$342.50 per ton	$0.51
1.6 lbs of corn oil	$0.26 per lb	$0.42

1 bag of seed corn produces enough ethanol to blend 12,000 gallons of E10 gasoline, which is enough to drive 230,000 miles
3.4 billion gallons of ethanol were produced in the U.S. during 2004
7.5 billion gallons of ethanol will be required by the Renewable Fuels Standard annually by 2012
5 billion gallons of gasoline energy is equivalent to 7.5 billion gallons of ethanol
400 million gallons is how much gasoline is used on a summer day
12.5 summer days is the time it takes the U.S. to burn 5 billion gallons of gasoline

Source: National Corn Growers AssociationEthanolfacts.com

Corn Uses

Over 4000 industrial uses of corn

Annual food and industrial corn use total 2 billion bushels

Primary products

Starches
Syrups
Dextrose

Co-products

Solubles: Steepwater
Gluten and Hulls: Steepwater for feed, gluten feed and meal, and oil meal
Germ: Corn oil

U.S. Corn Consumption

U.S. Corn Value

Soybean Uses

Contract / Identity Preserved Markets

Soybean

Clear hilum food-grade
High sucrose
Low saturate fat
High oleic
Low linolenic
Natto
Non-GMO
High protein
Organic

Oil quality: Saturated versus Unsaturated fatty acids

Public health and medical experts generally agree that consuming large quantities of saturated fatty acids can increase serum cholesterol levels

Restricting the level of saturated fat in a diet is one way to reduce serum cholesterol
Saturated fatty acids that contribute most to serum cholesterol are lauric acid, myristic acid, and palmitic acids

Types of fatty acids

saturated no double bonds monounsaturated one double bond
polyunsaturated two or more double bonds

Soybean oil is low in saturated fatty acids, and is recommended by many leading health associations as one of the vegetable oils of choice

Coconut oil and palm kernel oil are high in saturated fatty acids

Other websites

Grain Grading USDA Official Standards

NCH-5, Popcorn Production and Marketing: http://www.agcom.purdue.edu/AgCom/Pubs/NCH/NCH-5.html

Popcorn Production, University of Nebraska: http://www.ianr.unl.edu/pubs/fieldcrops/g426.htm

Alternative Field Crops Manual, Popcorn, University of Wisconsin: http://www.hort.purdue.edu/newcrop/afcm/popcorn.html

Agricultural Marketing Research Center Popcorn: http://www.agmrc.org/corn/pc.html

Corn Supply and Demand Estimates Excel Sheet (updated monthly from WASDE reports) - Kansas State
http://www.agmanager.info/livestock/marketing/graphs/Crops/Spreadsheets/Corn%20Supply%20&%20Demand.xls

Soybean Supply and Demand Estimates Excel Sheet (updated monthly from WASDE reports) - Kansas State
http://www.agmanager.info/livestock/marketing/graphs/Crops/Spreadsheets/Soybean%20Annual%20Balance%20Sheet.xls

Pre-made national supply and demand charts - Kansas State http://www.agmanager.info/marketing/outlook/WASDE/default.asp

Monthly World Agricultural Supply and Demand Estimates/WASDE Report - USDA http://www.usda.gov/oce/commodity/wasde/