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Econ 339X, Spring 2010 ECON 339X: Agricultural Marketing Chad Hart Assistant Professor/Grain Markets Specialist [email protected] 515-294-9911
Econ 339X, Spring 2010
ECON 339X:Agricultural Marketing
Chad HartAssistant Professor/Grain Markets Specialist
Econ 339X, Spring 2010
Today’s Topic
Marketing Plan Targets
Econ 339X, Spring 2010
Dec. Corn Futures
2.40
2.50
2.60
2.70
2.80
2.90
3.00
3.10
3.20
3.30
3.40
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct
$ pe
r bus
hel
1980's 1990's 2000's
Source: CBOT, Futures Price for 2nd Fridayof the month
Econ 339X, Spring 2010
Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Fridayof the month
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct1990 2.3975 2.4125 2.495 2.44 2.54 2.6675 2.8 2.785 2.6725 2.4475 2.24 2.30251991 2.5175 2.5175 2.485 2.58 2.6625 2.64 2.4375 2.42 2.27 2.55 2.54 2.51251992 2.5525 2.565 2.6275 2.7075 2.6475 2.54 2.595 2.6725 2.3275 2.2275 2.1875 2.07751993 2.4475 2.445 2.4275 2.4025 2.39 2.435 2.3975 2.2675 2.51 2.4425 2.35 2.48751994 2.5875 2.6525 2.7225 2.7175 2.6 2.5475 2.4675 2.62 2.2775 2.2075 2.24 2.1751995 2.51 2.4975 2.5175 2.565 2.5925 2.61 2.6675 2.8075 2.885 2.7925 2.935 3.25251996 2.8125 2.86 2.91 3.0375 3.175 3.2925 3.45 3.4825 3.835 3.295 3.215 2.80251997 2.71 2.6025 2.6225 2.68 2.92 2.8775 2.7175 2.54 2.54 2.57 2.6425 2.821998 2.83 2.84 2.7375 2.8775 2.845 2.7025 2.6825 2.4475 2.4225 2.165 2.0775 2.2551999 2.545 2.475 2.3825 2.4075 2.4275 2.3875 2.345 2.31 1.965 2.2275 2.1775 1.99252000 2.335 2.2825 2.4875 2.5225 2.52 2.5275 2.635 2.395 1.9425 1.8725 1.955 2.082001 2.53 2.5175 2.5425 2.45 2.47 2.2775 2.16 2.155 2.365 2.3425 2.2425 2.0852002 2.455 2.395 2.3925 2.3125 2.295 2.19 2.22 2.255 2.3275 2.615 2.7625 2.54252003 2.4125 2.405 2.41 2.4475 2.38 2.3975 2.495 2.4175 2.11 2.215 2.28 2.14252004 2.4775 2.495 2.5275 2.8125 2.9475 3.11 2.85 2.8 2.5225 2.2825 2.2225 2.06752005 2.395 2.3325 2.285 2.3025 2.45 2.295 2.2175 2.3025 2.4625 2.31 2.16 2.0352006 2.4325 2.4125 2.4875 2.5725 2.63 2.7075 2.8175 2.6775 2.7675 2.4175 2.46 3.1452007 3.4475 3.5025 3.945 3.9925 4.0775 3.7475 3.745 3.9225 3.685 3.505 3.49 3.512008 4.315 4.505 5.1325 5.3 5.75 6.04 6.5 7.65 6.285 5.1825 5.6325 4.032009 4.43 4.2 4.5425 4.055 4.18 4.07 4.3975 4.4775 3.315 3.2775 3.1975 3.72
Econ 339X, Spring 2010
Basis19901991199219931994199519961997199819992000200120022003200420052006200720082009
0.25250.27250.21750.2875
0.3150.37250.2225
0.380.415
0.34250.42
0.3950.25250.26250.3375
0.5550.455
0.490.340.25
Harvest basis from December corn futures for average cash prices for Iowa corn on the 2nd Friday of October, in $/bushel.
Econ 339X, Spring 2010
Marketing TypesHarvestAveragingPrice TargetTime and PriceExtended Time and Price
Econ 339X, Spring 2010
Marketing TypesHarvest
Takes the harvest price for 100% of their grain
Econ 339X, Spring 2010
Average Price Captured19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest2.052.241.862.201.862.882.582.441.841.651.661.692.291.881.731.482.693.023.693.47
Average 2.26Min 1.48Max 3.69
Econ 339X, Spring 2010
Marketing TypesAveraging
Sells 10% of their grain via futures each month January-JulySells the remaining 30% at harvestSets basis at harvest
Econ 339X, Spring 2010
Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Fridayof the month
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct1990 2.3975 2.4125 2.495 2.44 2.54 2.6675 2.8 2.785 2.6725 2.4475 2.24 2.30251991 2.5175 2.5175 2.485 2.58 2.6625 2.64 2.4375 2.42 2.27 2.55 2.54 2.51251992 2.5525 2.565 2.6275 2.7075 2.6475 2.54 2.595 2.6725 2.3275 2.2275 2.1875 2.07751993 2.4475 2.445 2.4275 2.4025 2.39 2.435 2.3975 2.2675 2.51 2.4425 2.35 2.48751994 2.5875 2.6525 2.7225 2.7175 2.6 2.5475 2.4675 2.62 2.2775 2.2075 2.24 2.1751995 2.51 2.4975 2.5175 2.565 2.5925 2.61 2.6675 2.8075 2.885 2.7925 2.935 3.25251996 2.8125 2.86 2.91 3.0375 3.175 3.2925 3.45 3.4825 3.835 3.295 3.215 2.80251997 2.71 2.6025 2.6225 2.68 2.92 2.8775 2.7175 2.54 2.54 2.57 2.6425 2.821998 2.83 2.84 2.7375 2.8775 2.845 2.7025 2.6825 2.4475 2.4225 2.165 2.0775 2.2551999 2.545 2.475 2.3825 2.4075 2.4275 2.3875 2.345 2.31 1.965 2.2275 2.1775 1.99252000 2.335 2.2825 2.4875 2.5225 2.52 2.5275 2.635 2.395 1.9425 1.8725 1.955 2.082001 2.53 2.5175 2.5425 2.45 2.47 2.2775 2.16 2.155 2.365 2.3425 2.2425 2.0852002 2.455 2.395 2.3925 2.3125 2.295 2.19 2.22 2.255 2.3275 2.615 2.7625 2.54252003 2.4125 2.405 2.41 2.4475 2.38 2.3975 2.495 2.4175 2.11 2.215 2.28 2.14252004 2.4775 2.495 2.5275 2.8125 2.9475 3.11 2.85 2.8 2.5225 2.2825 2.2225 2.06752005 2.395 2.3325 2.285 2.3025 2.45 2.295 2.2175 2.3025 2.4625 2.31 2.16 2.0352006 2.4325 2.4125 2.4875 2.5725 2.63 2.7075 2.8175 2.6775 2.7675 2.4175 2.46 3.1452007 3.4475 3.5025 3.945 3.9925 4.0775 3.7475 3.745 3.9225 3.685 3.505 3.49 3.512008 4.315 4.505 5.1325 5.3 5.75 6.04 6.5 7.65 6.285 5.1825 5.6325 4.032009 4.43 4.2 4.5425 4.055 4.18 4.07 4.3975 4.4775 3.315 3.2775 3.1975 3.72
Econ 339X, Spring 2010
Average Price Captured19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest2.052.241.862.201.862.882.582.441.841.651.661.692.291.881.731.482.693.023.693.47
Average 2.26Min 1.48Max 3.69
Averaging2.282.232.222.142.132.472.942.362.131.881.911.872.112.052.241.692.353.275.133.77
2.461.695.13
Econ 339X, Spring 2010
Marketing TypesPrice Target
Sells 25% of grain via futures when futures price > production costSells 25% when futures > costs + $0.25Sells 25% when futures > costs + $0.50Sells remaining 25% at harvestSets basis at harvestDefaults to harvest sales when price objectives are not reachedWill start selling in the November before planting
Econ 339X, Spring 2010
Costs of Production
Source: Iowa State University Extension,Dr. Michael Duffy
19901991199219931994199519961997199819992000200120022003200420052006200720082009
Cost Cost + 25 Cost + 502.40 2.65 2.902.46 2.71 2.962.31 2.56 2.812.28 2.53 2.782.34 2.59 2.842.46 2.71 2.962.50 2.75 3.002.53 2.78 3.032.56 2.81 3.062.56 2.81 3.062.52 2.77 3.022.66 2.91 3.162.65 2.90 3.152.51 2.76 3.012.67 2.92 3.172.87 3.12 3.372.94 3.19 3.443.10 3.35 3.603.65 3.90 4.154.52 4.77 5.02
Econ 339X, Spring 2010
Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Fridayof the month
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct1990 2.3975 2.4125 2.495 2.44 2.54 2.6675 2.8 2.785 2.6725 2.4475 2.24 2.30251991 2.5175 2.5175 2.485 2.58 2.6625 2.64 2.4375 2.42 2.27 2.55 2.54 2.51251992 2.5525 2.565 2.6275 2.7075 2.6475 2.54 2.595 2.6725 2.3275 2.2275 2.1875 2.07751993 2.4475 2.445 2.4275 2.4025 2.39 2.435 2.3975 2.2675 2.51 2.4425 2.35 2.48751994 2.5875 2.6525 2.7225 2.7175 2.6 2.5475 2.4675 2.62 2.2775 2.2075 2.24 2.1751995 2.51 2.4975 2.5175 2.565 2.5925 2.61 2.6675 2.8075 2.885 2.7925 2.935 3.25251996 2.8125 2.86 2.91 3.0375 3.175 3.2925 3.45 3.4825 3.835 3.295 3.215 2.80251997 2.71 2.6025 2.6225 2.68 2.92 2.8775 2.7175 2.54 2.54 2.57 2.6425 2.821998 2.83 2.84 2.7375 2.8775 2.845 2.7025 2.6825 2.4475 2.4225 2.165 2.0775 2.2551999 2.545 2.475 2.3825 2.4075 2.4275 2.3875 2.345 2.31 1.965 2.2275 2.1775 1.99252000 2.335 2.2825 2.4875 2.5225 2.52 2.5275 2.635 2.395 1.9425 1.8725 1.955 2.082001 2.53 2.5175 2.5425 2.45 2.47 2.2775 2.16 2.155 2.365 2.3425 2.2425 2.0852002 2.455 2.395 2.3925 2.3125 2.295 2.19 2.22 2.255 2.3275 2.615 2.7625 2.54252003 2.4125 2.405 2.41 2.4475 2.38 2.3975 2.495 2.4175 2.11 2.215 2.28 2.14252004 2.4775 2.495 2.5275 2.8125 2.9475 3.11 2.85 2.8 2.5225 2.2825 2.2225 2.06752005 2.395 2.3325 2.285 2.3025 2.45 2.295 2.2175 2.3025 2.4625 2.31 2.16 2.0352006 2.4325 2.4125 2.4875 2.5725 2.63 2.7075 2.8175 2.6775 2.7675 2.4175 2.46 3.1452007 3.4475 3.5025 3.945 3.9925 4.0775 3.7475 3.745 3.9225 3.685 3.505 3.49 3.512008 4.315 4.505 5.1325 5.3 5.75 6.04 6.5 7.65 6.285 5.1825 5.6325 4.032009 4.43 4.2 4.5425 4.055 4.18 4.07 4.3975 4.4775 3.315 3.2775 3.1975 3.72
Econ 339X, Spring 2010
Average Price Captured19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest2.052.241.862.201.862.882.582.441.841.651.661.692.291.881.731.482.693.023.693.47
Average 2.26Min 1.48Max 3.69
Averaging2.282.232.222.142.132.472.942.362.131.881.911.872.112.052.241.692.353.275.133.77
2.461.695.13
Price Target2.172.242.102.192.082.582.662.442.131.651.771.692.351.882.141.482.693.114.163.68
2.361.484.16
Econ 339X, Spring 2010
Marketing TypesTime and Price
Sell 25% in MarchSell 25% in AprilSell 25% in MaySell 25% at harvestSets basis at harvestOnly make March-May sales if futures prices > production costsDefaults to harvest sales if price objectives are not reached
Econ 339X, Spring 2010
Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Fridayof the month
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct1990 2.3975 2.4125 2.495 2.44 2.54 2.6675 2.8 2.785 2.6725 2.4475 2.24 2.30251991 2.5175 2.5175 2.485 2.58 2.6625 2.64 2.4375 2.42 2.27 2.55 2.54 2.51251992 2.5525 2.565 2.6275 2.7075 2.6475 2.54 2.595 2.6725 2.3275 2.2275 2.1875 2.07751993 2.4475 2.445 2.4275 2.4025 2.39 2.435 2.3975 2.2675 2.51 2.4425 2.35 2.48751994 2.5875 2.6525 2.7225 2.7175 2.6 2.5475 2.4675 2.62 2.2775 2.2075 2.24 2.1751995 2.51 2.4975 2.5175 2.565 2.5925 2.61 2.6675 2.8075 2.885 2.7925 2.935 3.25251996 2.8125 2.86 2.91 3.0375 3.175 3.2925 3.45 3.4825 3.835 3.295 3.215 2.80251997 2.71 2.6025 2.6225 2.68 2.92 2.8775 2.7175 2.54 2.54 2.57 2.6425 2.821998 2.83 2.84 2.7375 2.8775 2.845 2.7025 2.6825 2.4475 2.4225 2.165 2.0775 2.2551999 2.545 2.475 2.3825 2.4075 2.4275 2.3875 2.345 2.31 1.965 2.2275 2.1775 1.99252000 2.335 2.2825 2.4875 2.5225 2.52 2.5275 2.635 2.395 1.9425 1.8725 1.955 2.082001 2.53 2.5175 2.5425 2.45 2.47 2.2775 2.16 2.155 2.365 2.3425 2.2425 2.0852002 2.455 2.395 2.3925 2.3125 2.295 2.19 2.22 2.255 2.3275 2.615 2.7625 2.54252003 2.4125 2.405 2.41 2.4475 2.38 2.3975 2.495 2.4175 2.11 2.215 2.28 2.14252004 2.4775 2.495 2.5275 2.8125 2.9475 3.11 2.85 2.8 2.5225 2.2825 2.2225 2.06752005 2.395 2.3325 2.285 2.3025 2.45 2.295 2.2175 2.3025 2.4625 2.31 2.16 2.0352006 2.4325 2.4125 2.4875 2.5725 2.63 2.7075 2.8175 2.6775 2.7675 2.4175 2.46 3.1452007 3.4475 3.5025 3.945 3.9925 4.0775 3.7475 3.745 3.9225 3.685 3.505 3.49 3.512008 4.315 4.505 5.1325 5.3 5.75 6.04 6.5 7.65 6.285 5.1825 5.6325 4.032009 4.43 4.2 4.5425 4.055 4.18 4.07 4.3975 4.4775 3.315 3.2775 3.1975 3.72
Econ 339X, Spring 2010
Average Price Captured19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest2.052.241.862.201.862.882.582.441.841.651.661.692.291.881.731.482.693.023.693.47
Average 2.26Min 1.48Max 3.69
Averaging2.282.232.222.142.132.472.942.362.131.881.911.872.112.052.241.692.353.275.133.77
2.461.695.13
Price Target2.172.242.102.192.082.582.662.442.131.651.771.692.351.882.141.482.693.114.163.68
2.361.484.16
Time and Price2.332.312.252.142.132.412.962.452.211.652.021.692.291.882.411.482.693.285.243.47
2.461.485.24
Econ 339X, Spring 2010
Marketing TypesExtended Time and Price
Sell 25% in March or when futures prices > production costsSell 25% in April or when futures prices > costs + $0.25Sell 25% in May or when futures prices > costs + $0.50Only make March-May sales if futures prices > costsSell remaining crop at harvestSets basis at harvestDefaults to harvest sales if price objectives are not reached
Econ 339X, Spring 2010
Dec. Corn Futures
Source: CBOT, Futures Price for 2nd Fridayof the month
Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct1990 2.3975 2.4125 2.495 2.44 2.54 2.6675 2.8 2.785 2.6725 2.4475 2.24 2.30251991 2.5175 2.5175 2.485 2.58 2.6625 2.64 2.4375 2.42 2.27 2.55 2.54 2.51251992 2.5525 2.565 2.6275 2.7075 2.6475 2.54 2.595 2.6725 2.3275 2.2275 2.1875 2.07751993 2.4475 2.445 2.4275 2.4025 2.39 2.435 2.3975 2.2675 2.51 2.4425 2.35 2.48751994 2.5875 2.6525 2.7225 2.7175 2.6 2.5475 2.4675 2.62 2.2775 2.2075 2.24 2.1751995 2.51 2.4975 2.5175 2.565 2.5925 2.61 2.6675 2.8075 2.885 2.7925 2.935 3.25251996 2.8125 2.86 2.91 3.0375 3.175 3.2925 3.45 3.4825 3.835 3.295 3.215 2.80251997 2.71 2.6025 2.6225 2.68 2.92 2.8775 2.7175 2.54 2.54 2.57 2.6425 2.821998 2.83 2.84 2.7375 2.8775 2.845 2.7025 2.6825 2.4475 2.4225 2.165 2.0775 2.2551999 2.545 2.475 2.3825 2.4075 2.4275 2.3875 2.345 2.31 1.965 2.2275 2.1775 1.99252000 2.335 2.2825 2.4875 2.5225 2.52 2.5275 2.635 2.395 1.9425 1.8725 1.955 2.082001 2.53 2.5175 2.5425 2.45 2.47 2.2775 2.16 2.155 2.365 2.3425 2.2425 2.0852002 2.455 2.395 2.3925 2.3125 2.295 2.19 2.22 2.255 2.3275 2.615 2.7625 2.54252003 2.4125 2.405 2.41 2.4475 2.38 2.3975 2.495 2.4175 2.11 2.215 2.28 2.14252004 2.4775 2.495 2.5275 2.8125 2.9475 3.11 2.85 2.8 2.5225 2.2825 2.2225 2.06752005 2.395 2.3325 2.285 2.3025 2.45 2.295 2.2175 2.3025 2.4625 2.31 2.16 2.0352006 2.4325 2.4125 2.4875 2.5725 2.63 2.7075 2.8175 2.6775 2.7675 2.4175 2.46 3.1452007 3.4475 3.5025 3.945 3.9925 4.0775 3.7475 3.745 3.9225 3.685 3.505 3.49 3.512008 4.315 4.505 5.1325 5.3 5.75 6.04 6.5 7.65 6.285 5.1825 5.6325 4.032009 4.43 4.2 4.5425 4.055 4.18 4.07 4.3975 4.4775 3.315 3.2775 3.1975 3.72
Econ 339X, Spring 2010
Average Price Captured19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest2.052.241.862.201.862.882.582.441.841.651.661.692.291.881.731.482.693.023.693.47
Average 2.26Min 1.48Max 3.69
Averaging2.282.232.222.142.132.472.942.362.131.881.911.872.112.052.241.692.353.275.133.77
2.461.695.13
Price Target2.172.242.102.192.082.582.662.442.131.651.771.692.351.882.141.482.693.114.163.68
2.361.484.16
Time and Price2.332.312.252.142.132.412.962.452.211.652.021.692.291.882.411.482.693.285.243.47
2.461.485.24
Extended Time and Price2.292.282.232.152.162.392.662.412.241.652.021.692.351.882.331.482.693.114.163.68
2.391.484.16
Econ 339X, Spring 2010
Lowest Average19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest Averaging Price Target Time and Price Extended Time and Price2.05 2.28 2.17 2.33 2.292.24 2.23 2.24 2.31 2.281.86 2.22 2.10 2.25 2.232.20 2.14 2.19 2.14 2.151.86 2.13 2.08 2.13 2.162.88 2.47 2.58 2.41 2.392.58 2.94 2.66 2.96 2.662.44 2.36 2.44 2.45 2.411.84 2.13 2.13 2.21 2.241.65 1.88 1.65 1.65 1.651.66 1.91 1.77 2.02 2.021.69 1.87 1.69 1.69 1.692.29 2.11 2.35 2.29 2.351.88 2.05 1.88 1.88 1.881.73 2.24 2.14 2.41 2.331.48 1.69 1.48 1.48 1.482.69 2.35 2.69 2.69 2.693.02 3.27 3.11 3.28 3.113.69 5.13 4.16 5.24 4.163.47 3.77 3.68 3.47 3.68
Econ 339X, Spring 2010
Highest Average19901991199219931994199519961997199819992000200120022003200420052006200720082009
Harvest Averaging Price Target Time and Price Extended Time and Price2.05 2.28 2.17 2.33 2.292.24 2.23 2.24 2.31 2.281.86 2.22 2.10 2.25 2.232.20 2.14 2.19 2.14 2.151.86 2.13 2.08 2.13 2.162.88 2.47 2.58 2.41 2.392.58 2.94 2.66 2.96 2.662.44 2.36 2.44 2.45 2.411.84 2.13 2.13 2.21 2.241.65 1.88 1.65 1.65 1.651.66 1.91 1.77 2.02 2.021.69 1.87 1.69 1.69 1.692.29 2.11 2.35 2.29 2.351.88 2.05 1.88 1.88 1.881.73 2.24 2.14 2.41 2.331.48 1.69 1.48 1.48 1.482.69 2.35 2.69 2.69 2.693.02 3.27 3.11 3.28 3.113.69 5.13 4.16 5.24 4.163.47 3.77 3.68 3.47 3.68
Econ 339X, Spring 2010
Class web site:http://www.econ.iastate.edu/classes/econ339/hart-lawrence/
