So if your marketing plan is built to sell above $6 per bushel, you have a four in ten chance (41 percent) of selling corn above the expected season average price. Schnitkey says, “Historical price changes suggest that a wide range of prices are possible in 2013. Prices below $4.50 per bushel are possible. Some of these are low and could signal lower net farm incomes. While not likely, price changes outside of historical chances also are possible.”
When working on a marketing plan for the coming year, season average prices will usually determine boundaries for most pricing opportunities. However, calculating the relationship between the season average price and the current delivery price will provide an opportunity to market grain with reasonable knowledge of the chances that prices will occur.
Source: FarmGate blog