Top production? Or top dollar? Before the mid-1990s, the key to successful marketing was knowing when to sell. Freedom to Farm, with its market loan and loan deficiency payment, looks to have clamped a ceiling on crop prices.

If someone offered to contract your next five corn crops at $2.50 per bushel, would you take him up on it? You probably wouldn't if you recall the 1994-95 marketing year when corn prices (however briefly) hit $5 per bushel or more. But for the past 10 years, $2.50 corn would have paid a premium of 18 cents over the average price.

Much the same thing with soybeans booked at $6 per bushel. Over the past decade, beans have averaged only $5.87 per bushel, and that takes in those high-price years of 1995-97.

As an exercise in "so what" information, look at both corn and soybeans over the past 10 years. Take the supply on hand at the beginning of harvest and add that year's crop to come up with total stocks on hand for the marketing year (Table 1 and Table 2).

Not surprisingly, prices were somewhat better (most of the time) in years with a relatively short crop and low total supply. But not that much better, generally. When you multiply total supply by the year's average price, gross crop income is similar.

In fact, growing less can mean more in terms of gross value. For example, 1995-96 was the smallest corn crop of the past 10 years and the second smallest total supply. Still, gross value was $1.25 billion more than the 10-year average. Part of that can be explained by strong export demand in the mid-1990s, which pushed prices so high that global demand for corn was curbed.

Growing more is not always the way to higher income, either. Take the marketing year 1999-2000 (the last year for which all figures are available). We grew the second biggest corn crop and piled up the biggest total supply of the past decade, but total value was $1.4 billion less than the 10-year average. Soybeans show about the same performance. In 1999-2000, total soybean supplies on hand topped 3 billion bushels for the first time--more than 900 million bushels above the 10-year average. But gross value was off the average pace by more than $500 million.

Before the mid-1990s, the key to successful marketing was knowing when to sell--hopefully near market tops. The 1996 Freedom to Farm law, with its market loan and loan deficiency payment (LDP), has effectively clamped a ceiling on crop prices. The loan rate and LDP have set a fairly static market on both corn and soybeans. When prices aren't moving, there's less opportunity to earn money in marketing.

"Holding grain [for a better price] doesn't accomplish much when the price stays at or below the loan rate," said Roger Caffrey, MFA director of grain marketing. "With the LDP, hanging onto grain can actually cost money."

Caffrey points out that stored grain racks up costs of about three cents per bushel per month, plus interest on the investment in stored grain. Those interest costs can total two cents per bushel per month on corn--more on soybeans. That means if you hold grain for six months, hoping for a better selling price, you've added 35 cents or more to the cost of each bushel.

"In the past three years, how many times have we seen prices go up by more than 35 cents over a six-month period?" asked Caffrey. "Not many. Most of those years producers were better off to sell grain and take the LDP. In fact, holding actions typically drive prices down."

That's especially true in the past two or three years, when the Chicago high for soybeans came in October and November. Lows for those years were in the following July, so holding for eight months following harvest definitely did not pay.

Corn looks different this year. U.S. producers expect to harvest 69.5 million acres for grain--that's down 9 percent from 2000, and the smallest corn acreage since 1995. Demand stays relatively strong, thanks largely to a 75-million-bushel jump in export projections. That may mean a bit of a price rally in late summer, but a big crop could still hold prices around $2 per bushel.

Soybeans are another matter. While wet weather in many areas at planting time delayed the season, growers still expect to harvest beans from about 74.5 million acres. That's 2 percent above last year and a record soybean acreage. An average harvest of only 40 bushels per acre will push the bean crop into the 3-billion-bushel range.

There's still time for a disaster of some kind to hit the 2001 crop, but the odds are thin if you're betting on it.

"Basing marketing hopes on a widespread disaster is like betting the farm at the big roulette wheel in Las Vegas; it's not likely to happen," said Caffrey. "Normally, things turn out normal, and that's the way to bet."