Step One: Know Your Numbers
Before any price talk, calculate your full cost of production per bushel: land, seed, fertilizer, chemicals, fuel, machinery, labor, interest, and a return to management. Include realistic yield expectations based on your actual production history, not your best year. This number is the foundation everything else sits on. A price below it is not a marketing problem to hope away; it is a signal about how aggressive to be with risk management and how much to leave unpriced for possible rallies. Recalculate it every year, because input costs move faster than most people update their mental math.
Step Two: Set Targets and Tools
- Price targets: choose several levels above your cost, each with a share of expected production assigned, for example 20 percent at the first target, 20 percent at the next, and so on.
- Tool per target: cash forwards for confident bushels, minimum price contracts where you want upside, HTAs when basis should improve, puts where production is uncertain.
- Time triggers: add dates by which unpriced bushels get marketed regardless of price, so the plan cannot stall into permanent storage.
- Insurance check: pre-harvest sales should stay within insured bushels so a short crop cannot force a buyout.
Step Three: Execute and Review
Execution is where plans live or die. Place standing orders where possible so targets trigger without you watching the screen, and track priced versus unpriced bushels as the season moves. Soybeans carry their own wrinkles: South American harvest pressure typically arrives in late winter and spring, basis behaves differently than corn in many areas, and storage economics often favor moving beans earlier than corn. Review the plan after harvest, honestly, and improve next year's version. Note which targets filled, which tools earned their cost, and exactly where emotion overrode the written plan, because that is exactly where the money leaks out of an otherwise sound operation year after year. Futures trading involves substantial risk of loss and is not suitable for all investors. If you want a second set of eyes, Capitol Commodity Hedging Services offers a free two-week trial of client services including broker guidance and simulated trading to test a plan before real money is involved.