Forward Pricing Strategies for the South Central Illinois Corn Producer

Abstract

Price volatility and current agricultural economic conditions have induced a need for grain farmers to develop pricing strategies that take advantage of favorable pricing opportunities. This paper identifies eighteen pricing strategies, evaluates them over a four-year historical optimization period, and compares the average price received to the cash delivery price at harvest. Twelve of the eighteen strategies resulted in an average net price higher than the harvest delivery base. The strategies were then tested with a fifth year of data to evaluate their effectiveness outside the optimization period. Only one of the twelve optimum strategies from the historic period produced a lower net price in the 1984 test period than the harvest delivery price.