Grain Marketing 101: Locking In Prices Without Locking Up Your Cash Flow
August 28, 2026 | Market Trends | Ag Lending Group Team
Every marketing tool has a cash flow consequence attached to it, and that part gets left out of a lot of the marketing advice floating around. A forward contract might lock in a great price, but if it requires margin calls or ties up bushels you end up needing for on-farm feed or a late storage decision, the "good deal" on paper can create a real cash crunch in October.
The Basics, Briefly
A forward contract locks both price and delivery with your elevator or buyer — simple, but inflexible once signed. A hedge-to-arrive contract locks the futures price now and lets you set basis later, useful when you're confident about the board but want to wait on local basis. A basis contract does the reverse: lock basis now, price later. None of these is inherently better; they solve different problems depending on what you're more worried about, the futures market or your local basis.
Where This Intersects With Financing
We bring this up because your marketing plan and your operating line are more connected than most people treat them. If you've forward-contracted 60% of expected production at a strong price, that's real, bankable certainty we can factor into how we structure your operating advance — often meaning better terms, since your revenue picture is that much more predictable. On the flip side, an operation that markets nothing until after harvest is taking on price risk that a lender has to account for somewhere in the terms.
A Grower's Approach Worth Borrowing
An operation we work with in Ohio splits their marketing into thirds: roughly a third forward-contracted by planting, a third priced through the growing season as targets hit, and a third held to market after harvest when they have better information on their actual yield. It's not a formula that works identically for everyone, but the discipline behind it — never betting the whole crop on one guess about where the market's headed — is worth adapting to your own operation.
Don't Let Margin Calls Catch You Off Guard
If you're using futures or options directly rather than contracting through your elevator, make sure your working capital plan accounts for potential margin calls. We've seen well-marketed crops create real cash stress simply because the margin account wasn't funded for a worst-case move. Build that cushion in before you need it, not after a margin call catches you mid-harvest.
If you're building out a marketing plan for this crop or next year's, loop us in on the cash flow side. We can help you see how a given strategy plays against your operating line so the two aren't working against each other.