Author: William E. Maples

International markets support U.S. agriculture, especially in the Southern states. Exports make up a significant portion of cash receipts for many major commodities produced in the Southern states (Figure 1). From 2010 to 2023, an average of 84% of cotton receipts came from exports, underscoring the crop’s reliance on global trade. Wheat and soybeans also depend heavily on international markets, with exports accounting for 64% and 55% of their respective receipts. In contrast, corn is less export-oriented, with just 19% of receipts linked to foreign buyers^[1]. This level of exposure makes Southern agriculture especially sensitive to tariff changes and trade policy shifts. During periods of uncertainty, a well-informed marketing and risk management strategy is often the best defense producers have against market volatility.

A well-developed marketing and risk management plan is essential for producers facing today’s volatile markets. While trade uncertainty is a significant source of price swings, volatility is a constant in agriculture—driven by weather, input costs, and global events. Trade is one of the dominant factors right now. Regardless of the cause, producers should expect uncertainty and be ready to manage price risk each crop year. A strong marketing and risk management plan is the best tool for navigating uncertainty. Crucially, the plan should be written down and shared with everyone involved in the operation to ensure clear communication and timely decisions. Growing a crop and marketing a crop involve two completely different skill sets, so communication between those in charge of production and those in charge of marketing and risk management is essential. 

The most significant value of a marketing plan is determining sales timing, which should coincide with when production risk is reduced, and what action should be taken at different price points. Trying to time price peaks in markets shaped by unpredictable trade shifts is often ineffective and can be risky. Instead, a solid marketing plan sets decision dates, creating structure around when and how much to sell if markets achieve price targets. Dates should be tied to when production risk is reduced and be informed by realistic price targets, helping producers stay disciplined and focused on financial goals while taking some of the emotion out of pricing decisions. The key is to make sales when prices meet or exceed profit objectives at strategic points in the production/marketing year—even if prices might rise later. Especially in tight-margin years, locking in profits when available can be critical to the operation’s financial success.

Producers may benefit from a more proactive sales strategy in today’s challenging market environment when profit opportunities arise. For instance, a summer weather rally that pushes prices higher could present a good time to forward contract or price additional bushels before harvest. While aggressiveness in pre-harvest marketing will vary depending on each producer’s risk tolerance, defining that comfort level in advance is essential. The best marketing decisions are those made with forethought—not in the heat of the moment. In years with tight margins, relying on chance is a risk most operations can’t afford.

Figure 1. Export Contribution to Southern Ag Receipts, Observed and Average Share by Commodity, 2010-2023

---

^[1] Estimates do not include by products for crops such as ethanol, dried distiller grains (DDGs), soybean oil, and soybean meal.

---

Maples, William E., and Grant Gardner. “Managing Crop Markets When Trade Disrupts Prices.” Southern Ag Today 5(19.3). May 7, 2025. Permalink

As soybean producers prepare for the upcoming growing season, global soybean stocks are exerting a bearish influence on the market. Currently, USDA projects the 2024/25 marketing year to have a record-high level of ending stocks at 131.87 million metric tons. If realized, this would be 17.62 million metric tons greater than the previous record high in 2018. The final estimate for ending stocks will depend on how the South American crop concludes. So far, Brazil has experienced favorable weather conditions, making it likely that it will achieve its estimated record soybean production this year. The outlook for Argentina is less certain.

The majority of the increase in global soybean stocks can be attributed to one country (Figure 1). China holds the largest share of these stocks, with 46.01 million metric tons, marking an 83% increase since 2021. This growth accounts for 53% of the overall increase in global stocks during the same period. Brazil and Argentina have seen a 22% increase in ending stocks since 2021. In contrast, of the four major countries in soybean markets, the United States maintains the smallest amount of stocks at 12.8 million metric tons, but this still reflects a 71% increase since 2021.

Another way to analyze ending stocks is by comparing them to a country’s annual usage, which can be illustrated through the concept of days-on-hand. Figure 2 shows the days-on-hand globally and for Argentina, Brazil, China, and the United States. Global days-on-hand are projected at 119 days, the second highest on record. Before 2022, China never had more than 92 days on hand but is currently projected to have a record 132 days of soybeans on hand. Argentina has increased from a decade-low of 152 days on hand in 2022 to a record 199 days on hand in 2024. The United States is projected to have 119 days of soybeans on hand, the second-highest figure since days-on-hand peaked during the 2018 trade war with China.

Due to the current high levels of stocks projected by the USDA, soybean prices are expected to remain weak in early 2025. With a record crop expected from Brazil, the market is unlikely to see significant upward price movements in the coming months. While changes in weather conditions or harvest delays in South America could potentially drive prices higher, producers may have to wait until the market shifts its focus to the planting of the upcoming U.S. soybean crop before witnessing any substantial increases in prices. Given the uncertainty regarding future price direction, it is essential for producers to start preparing a marketing plan for the upcoming year and be ready to take advantage of profitable prices if they arise.

Figure 1. Global Soybean Stocks by Country; 2019-2024

Figure 2. Soybean Days-On-Hand; World and Select Countries; 2000-2024

---

Maples, William E. “Record High Global Soybean Stocks.” Southern Ag Today 5(2.3). January 8, 2025. Permalink

As soybean prices for U.S. producers deteriorate, they face fierce competition from greater Brazilian production in the export market. USDA-WASDE projects the 2024/25 average farm price to be down $3.40 from two years ago, at $10.80 per bushel. U.S. soybeans rely heavily on the export market; on average, 47% of U.S. soybeans were exported in the previous five years. For over a decade, Brazil has maintained its position as the world’s largest soybean exporter, and in recent years, it has further expanded its global market share (Figure 1). USDA-WASDE projections for the 2024/25 marketing year estimate Brazil will account for 58% of global soybean exports, with the United States trailing at 28%. The remaining 14% will come from other exporting nations. While Brazil’s share has dipped slightly from last year’s peak of 59%, it continues to dominate the global soybean export market. 

The U.S. soybean market is facing challenges with Brazil strengthening its position as China’s primary supplier. China has been working to become less dependent on U.S. soybean purchases, and increased production has allowed Brazil to become the preferred trading partner. According to the Foreign Agricultural Service’s Beijing post, in the first nine months of the 23/24 marketing year, the U.S. accounted for 26 percent of China’s soybean imports, compared to 69 percent from Brazil. Reports also indicate that China is dealing with an oversupply of soybeans, as recent high purchases come during subdued feed demand. This fact has hampered sales to China as we enter the peak marketing season for U.S. soybeans. While U.S. sales to China have risen recently, they are still trailing behind last year’s sales and the five-year average. As of the week ending 9/19/24, the total soybean commitments to China totaled 6.8 million metric tons, compared to 7.4 million for the same time last year and the five-year average of 10.6 million.  

                  The export outlook for U.S. soybeans is further complicated by the prospect of low river levels on the Mississippi River, a concern highlighted in last week’s article “Low River Levels on the Mississippi River: Not the Three-peat We Want” (southernagtoday.org). Recent rainfall from Hurricane Helene has improved the river situation, as the Mississippi River at Memphis is expected to rise above the low river threshold. Without a positive shift in the current export scenario, U.S. producers face lower prices as they harvest a record soybean crop. With Brazil now dominating the export market, the potential for price increases this year depends heavily on the progress of Brazil’s soybean planting season. Although Brazil has just entered its planting window, dry conditions in the central region could lead to delays. If drought conditions develop, it could create an opportunity for higher prices for U.S. producers. Current forecasts call for rain over the next couple of weeks, but rainfall remains below normal.  

Figure 1. Share of Global Soybean Exports by Country, 2010-2025

References 

United States Department of Agriculture, Foreign Agricultural Service. Oilseeds and Products Update: Beijing, China – People’s Republic of China. CH2024-0116, 2024, https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Oilseeds%20and%20Products%20Update_Beijing_China%20-%20People%27s%20Republic%20of_CH2024-0116.

---

Maples, William E. “Brazil Expected to Continue Dominance of Global Soybean Exports.” Southern Ag Today 4(40.3). October 2, 2024. Permalink

The USDA Quarterly Stocks Report, representative of stocks held on June 1, indicated that both corn and soybean stocks (Figures 1 and 2) are higher than in recent years. High stocks are a bearish factor for the market as they increase the supply side of the balance sheet going into the new marketing year and have been one of many contributing factors to the price decline experienced this summer in corn and soybean markets. A significant insight from the report is how much stock is still stored on-farm versus off-farm.  On-farm corn stocks are at the highest level since 1988 and up 37 percent from last year. On-farm soybean stocks are up 44 percent from a year ago. Given the high level of stocks still being held by producers, it is appropriate to discuss the importance of having an exit strategy that allows producers to exit old crop positions in preparation for new crops. While the exit strategy ideally should be decided before grain goes into storage, some pieces of the discussion below could still be implemented this late in the marketing year. 

An exit strategy marks the official end of marketing activities for a particular crop year. No matter what type of marketing tool is used, a basic exit strategy utilizes price-driven or time-driven methods. Specific price targets guide a price-driven exit strategy. An example would be selling stored grain at X cents over the harvest price. In this case, the harvest price would be what the grain could have been sold for at harvest. Ideally, a price-driven exit strategy would divide sales up across a range of prices; an example for corn would be selling 10,000 bushels at $4.25 per bushel, 10,000 bushels at $4.40 per bushel, and the last 10,000 bushels at $4.50 per bushel. As each price level is attained, grain is sold. This strategy diversifies price targets to ensure you are not stuck with mostly unpriced grains when transitioning into the lower price environments we are currently experiencing. Another example would be selling stored grain at X cents under the harvest price. At some point, exit strategies need to be used to cut losses. Price targets serve as bookends that guarantee the producer will not be left holding grain indefinitely, speculating on a marketing situation that never occurs.

Another exit strategy is to set predetermined sale dates. This could be as simple as “I will sell all stored grain by July 31” or “I will sell 10,000 bushels the first of each month, with my final sale occurring July 31.” Setting a predetermined date forces the producer to take a marketing action. An exit strategy can have both price-driven and time-driven components, for example, selling all stored grain at $4.25 per bushel or higher before July 31^st. Being late in the marketing year, a producer can still sell their grain and maintain a position in the market by buying a call option. If it is decided to hold on to the physical grain, producers will likely need to plan to store until after harvest, as harvest pressure will decrease the likelihood of a better pricing environment.     

While the exit strategies discussed above may seem straightforward, they do a good job of curbing emotional hesitancy in marketing decisions. One of the most challenging emotions for producers to control is regret. A producer might feel regret if they sell right before a rally begins or decide not to sell before a market downturn. Dwelling on regret about past sales can make producers hesitant to book future sales.  A well-developed exit strategy can assist producers in coping with emotional bias in marketing decisions. A successful grain sale is based on sound reasoning, with each component of the exit strategy being grounded in price targets derived from production costs and time targets based on local market seasonality. This exit-strategy approach ensures that each marketing decision is reasonable and not regretted in hindsight. An exit strategy gives producers a way out of the old crop and allows them to focus on new crop positions. 

Figure 1. On-Farm and Off-Farm June 1 Corn Stocks 

Figure 2. On-Farm and Off-Farm June 1 Soybean Stocks 

---

Maples, William E. “Having a Way Out.” Southern Ag Today 4(30.1). July 22, 2024. Permalink

As planting begins, it is an excellent time to review the various cash grain contracts available for producers to incorporate into their crop marketing plan. When considering contracts, the producer must understand the special features of each contract and the type of risk it is managing. Producers must also consider the effects of market movement on the contract outcome. This article outlines some common types of grain contracts and how the market can affect the contract results. Producers should speak with their local grain purchaser about the availability of the following contracts and associated fees. 

Cash Market Sales – A cash market sale is simply selling grain at the prevailing market price. A producer may choose to sell in the cash market if they deem it appropriate to sell at the market price or if they need to move old crop grain from storage to create space for the new crop. Cash market sales are risky as a marketing strategy because the market price might not be acceptable when the producer is forced to sell, especially if no other strategy is in place.

Forward Contract – A grain farmer may enter into a forward contract with a grain buyer, requiring the producer to deliver a specific quantity and quality of grain at a certain time, place, and price. This type of agreement can be made before planting or anytime during the growing season.

Minimum Price Contract – A minimum price contract is an agreement between the producer and elevator in which a producer is guaranteed either a minimum agreed upon price or the current cash price. Under this contract, a producer must pay a premium, which is relatively high in volatile markets, and any transaction charges. A minimum price establishes a price floor and allows for upside price potential without the direct use of futures and options. Additionally, the contract can provide some leverage in obtaining credit.   

Basis Contract – Basis is defined as the local cash price minus the futures price. A basis contract is an agreement in which a producer and elevator establish a basis but not the futures price. The producer can select the day on which the futures price is set. A basis contract is useful when the basis is stronger than normal or when one thinks the basis will weaken before a sale is made. Since a basis contract does not set a price, this contract does not provide price upside potential and exposes a seller to downside price risk since futures prices may move lower. A delivery obligation is established, so a producer is exposed to the production risk of fulfilling the contract.

Hedge-to-Arrive Contract  – A hedge-to-arrive contract is the opposite of a basis contract and is an agreement that allows the producer to set the futures price but leaves the basis to be set at a later date and prior to delivery. Once the basis is established, the producer will receive the futures price less the basis. 

Price Later (Delayed Pricing) Contract – A price later contract allows the producer to deliver grain and establish the sale price at a later date. Upon delivery, the title of the grain passes to the buyer. The price a producer receives will be the elevator cash price on the day the producer decides to establish the price minus any service charges. This contract allows the producer to move grain despite a relatively low price environment, but the producer is still open to downward price risk if the market moves against them since the grain is unpriced. 

Which tool should a producer use?

            Figure 1 provides a guide on when to consider using the different types of contracts. The top right quadrant of Figure 1 represents ideal market conditions. In this quadrant, futures prices are expected to rise, and basis is expected to strengthen. Contracts that provide upside price potential are attractive in this scenario. These include minimum price contracts or price later contracts. The bottom left quadrant of Figure 1 represents the worst-case scenario for market conditions. Futures prices are expected to decrease, and the basis is expected to weaken. This scenario suggests that current market conditions are better than expected. Producers will want to consider selling at current price levels with either cash sales or a forward contract. 

            The top left and bottom right quadrants represent market conditions that are somewhere in between the best- and worst-case scenarios. The top left quadrant represents expected higher futures prices but with the risk of the basis weakening. A basis contract would allow producers to limit basis risk in this scenario by locking in a basis and providing upside potential for the price. The bottom right quadrant represents the expectation of increasing basis but a lower futures price. A hedge-to-arrive contract would allow producers to lock in a futures price and limit price risk but still be able to take advantage of a strengthening basis.  

Figure 1. Best Fit Alternatives for Grain Contracts by Market Conditions*

---

Maples, William E. “Cash Grain Contracts and When to Use Them.” Southern Ag Today 4(18.1). April 29, 2024. Permalink