Corn Research

Comparing returns for grain corn production under various marketing strategies
Dr. Richard Vyn, University of Guelph, Ridgetown Campus

This project involves the development and use of a simulation model to examine and compare various marketing strategies for grain corn, for the purpose of determining the strategies that tend to generate the highest average prices
per bushel.

The strategies that will be examined include marketing tools that are regularly utilized by corn producers in Ontario, such as forward contracts, basis contracts, futures contracts, cash sales, and combinations of these tools. Specific strategies, including timing of contracts and sales, were developed through consultations with marketing specialists and producers to ensure that these strategies are representative of those currently used by corn producers.

The marketing simulation model will use historical pricing data, derived in part from historical daily Ontario Commodity Reports (1992-2008), to determine the range of prices received under these marketing strategies in each year. The results of this model will be used to compare returns generated by each of the marketing strategies within each year as well as across all years. In addition, comparisons will be made among strategies that use primarily cash sales versus those that involve marketing a substantial portion of the crop through forward contracts, futures contracts, or options.

The results of this project will provide evidence indicating the strategies, timing of sales or contracts, and combinations of marketing tools that tend to result in higher average prices received for each crop year. This evidence will provide Ontario corn producers with information that will be beneficial for the development of effective marketing strategies that may increase their returns.

This project is supported through ORD.

Click here for the complete report (pdf).