Wade Hubers had prices locked in for more than half of his 2005 corn crop before the first of November. Should the market go up, he'll benefit. Should the market take a dive, he'll still have a reasonable year.

All that remains is producing the crop, and he's even hedging against the unlikely event of a crop failure.

Meanwhile, he's still reflecting on the fun year he had marketing in 2004.

“This year has been a fun year,” says the Pantego, N.C., farmer who grows corn and soybeans. Historically high corn prices presented a lot of opportunity. If growers took advantage of the opportunities and sold, they are now adding to those good prices with LDP payments. “It doesn't get much more fun than that. It's almost embarrassing in a year like this year when you tell somebody this was a fun year and they're looking at $2 corn and still haven't sold anything. It's not that much fun to them.

“If it's not something you really like, marketing can be very frustrating and unsatisfying,” Hubers says.

But it can be learned. Hubers started working with a marketing advisor in 1981. “He helped me see the value of discipline. He helped me separate the emotion from the marketing. As farmers we tend to be emotionally attached to the crop.”

Using a scale-up strategy, Hubers begins selling once he gets into the profit zone — beyond the cost-of-production. “We sell on the way up and when we feel like it's topped out, we continue to sell on the way down, so that by the time it gets back below the profit level, we've pretty much sold 100 percent.”

That happened this year, when Hubers advised the group of farmers to sell the remainder of their corn crop in July while most were waiting for prices to go to $4 a bushel. The move made the growers money.

With soybeans, it's a little different situation. He missed the highs of this past season because he didn't have the beans on hand, but the philosophy of hitting the top third of the market still garnered him premiums and profit.

Speaking from experience, Hubers says farmers become emotionally attached to their crop. “They're always wanting to hit that home run to make up for last year's losses. That very seldom happens.”

Hitting the top of the market might be a once-in-a-lifetime thing, but it's not a steady, profitable approach an ag lender can rely on.

A successful marketing plan focuses more on base hits than home runs. “A lot more games are won by base hits than by home runs,” Hubers says. A farmer gets on base by knowing cost of production and selling when he's at that level, regardless of where he thinks the price is going. “You may sell in small increments if you think there's a 90 percent chance that the price will go higher. As it goes up, increase the size of the increments.”

In years when he doesn't get to a profitable level, he still “gets a floor under the crop by forward booking and hedging.”

It takes discipline, however. When corn went from $2.50 a bushel to $3.49 a bushel, there was the temptation to wait until it reached $4 a bushel to sell. “When it got to $3.25, any farmer could make money and he should have been selling heavily. But they all thought corn might go to $4 and they didn't want to miss that $4.”

Hubers doesn't mind missing the highs. “I want to come out with a good average every year,” he says.

A common marketing mistake is to change the program to fit the year. “I try to stick with the same program year in and year out,” he says. “I always heavily book.”

He's seen the tug and pull of emotions and greed work so often that he's built it into his marketing plan. If corn is at $3.25, but he thinks it's going to go up to $4 because of an early frost prediction in the Midwest, Hubers will spend 8 cents to 10 cents on a call. “That call deals with my emotions and my greed,” he laughs. “But the $3.25 contract deals with my needs.”

Should prices go higher, Hubers will still capture some of the upward movement. “I'll probably never get the high when prices go real high, but that doesn't worry me near as much as being the low in a year when the prices go really low.” He'll buy calls when prices bottom as a hedge against counter-cyclical payments.

He uses the same scale-up strategy with soybeans. He forward contracted about 60 percent of this year's crop at $7.17 per bushel. The other 40 percent of the crop he planted in Group III and Group IV soybeans to harvest at the first of September. Hubers sold those soybeans for a $1 premium, netting $6.75 per bushel. “And now I'm filling my contracts and I've still got $7 beans left to sell.”

Twice a month, he has a conference call with a small group of farmers he advises on markets. Before the telephone meeting, Hubers e-mails condensed versions of what the analysts are saying. The rest of the time he spends voraciously poring over anything he can get his hands on regarding marketing.

“The biggest fear about forward contracting that farmers have is, ‘What if I don't have a crop to sell?’” Hubers says. “That is a concern, but I've been in the grain business in the past and unless the whole Southeast has a bad crop, there are brokers I can call for a penny a bushel to get my contract filled. If I've got it sold at a good price, I'm going to make money on that portion, even if I'm short.”

Hubers acknowledges he's in a somewhat speculative position once he passes the 50 percent forward contracting level, so he waits until the last minute when he knows what kind of crop he has to lock in the remainder. In July, he advised the farmers he consults with to sell the remainder of their crop at $2.40 per bushel before the price slid to $2.05. “They gained about 35 cents per bushel by acting and not just sitting there and hoping that it would come back,” Hubers says.

With the onus of marketing out of the way, he can concentrate on growing the crop. This year, he averaged 167 bushels per acre on corn and 52 bushels per acre on soybeans. “This year was my second best corn year ever,” Hubers says. “But last year was the poorest crop since I've been farming.”

The difference, he says, is marketing. In a good year, he captures the upside of the market. In a bad year, when prices take a dive, his operation doesn't take a dive.

He's totally no-till. On corn, he's looking at 20-inch rows and increasing plant populations. He's gone to early season soybeans to garner premiums and has abandoned wheat in the rotation.

e-mail: cyancy@primediabusiness.com