The Advantage of Pre-Harvest Marketing

Due to the seasonality of crop prices, farmers often have opportunities to make profitable pre-harvest sales. Historical price patterns indicate that new crop pricing opportunities in the spring and summer are generally more favorable than harvest-time sales. As can be seen in Chart 1, corn, cotton, and soybean prices peak on average before harvest. Corn and soybean prices tend to rally in late spring and peak in June. Cotton peaks earlier in the spring but maintains higher prices until June. Uncertainty of production during the growing season can drive prices higher and present pre-harvest marketing opportunities.

From 1990 to 2024, December corn futures exhibited a consistent trend of price declines between May 1 and October 1. This pattern occurred in 26 out of 35 years, or 74% of the time, as shown in Table 1. On average, prices dropped by 29 cents per bushel during this period. Notably, in 19 of those 26 years, the decline exceeded 10%. Over the past decade, this trend persisted, with prices falling in 8 out of 10 years during the same timeframe.

Soybean futures demonstrated a similar, though less pronounced, pattern. November soybean futures prices declined from May 1 to October 1 in 23 of the 35 years analyzed (Table 2). On average, soybean prices fell by 40 cents per bushel. In 11 of those years, the decline was more than 10%. Over the last decade, this pattern was observed in 7 of 10 years, underscoring the tendency for prices to decrease during this period.

December cotton futures also exhibited a seasonal decline over the same period, though the trend was weaker compared to corn and soybeans. From 1990 to 2014, cotton futures fell by an average of 4 cents per pound between May 1 and October 1. Prices decreased in 21 of the 35 years reviewed, or 60% of the time. Among these, 10 years saw price drops exceeding 10%. Over the last decade, the declining trend was evident in 7 of 10 years.

These price trends highlight the potential benefits of incorporating pre-harvest sales into a marketing plan, as doing so can help producers secure higher prices in most years. To mitigate the risk of making a pre-harvest sale and being unable to deliver due to crop failures, producers can use revenue insurance. As a general guideline, producers should market only as many bushels as crop insurance covers. Since it is impossible to consistently time sales to achieve the highest price, producers should base pre-harvest marketing decisions on pre-determined targets rather than attempting to predict market peaks.

Table 1. December Corn Futures Price, 1990-2024, May 1 vs October 1 ($ per bushel)

Table 2. November Soybean Futures Price, 1990-2024, May 1 vs October 1 ($ per bushel)

Table 3. December Cotton Futures Price, 1990-2024, May 1 vs October 1 ($ per pound)