When you harvest corn or soybeans, you face an immediate choice: sell now at the elevator, or pay to store and sell later. That decision hinges on commodity price spreads—the price difference between futures contracts, between different months, and between what your local elevator offers versus the futures market. Understanding spreads transforms storage from a guess into a calculation.
What Commodity Price Spreads Tell You
A commodity price spread is the difference between two prices. The most common spreads for row-crop farmers are calendar spreads (the price difference between harvest-month and spring-month futures contracts) and basis spreads (the difference between your local elevator bid and the futures price). When the spring contract trades higher than the harvest contract, storage can be profitable—if the spread exceeds your cost to store.
For example, if December corn futures are $4.20 and March corn futures are $4.40, you have a 20-cent calendar spread. If your elevator offers $4.15 for immediate sale and $4.35 for March delivery, the implied spread accounts for storage, insurance, and the elevator's margin. Your job is to compare the spread against your actual storage cost per bushel per month.
Spreads widen and narrow based on supply, demand expectations, and storage availability across the region. A bumper crop year often compresses spreads because elevators expect heavy storage demand; a tight supply year may widen spreads because storage is scarce and valuable.
Quick Tips
- Track your actual storage cost per bushel per month (facility cost, insurance, shrink, fumigation) before deciding to store.
- Compare the calendar spread against your storage cost; if spread < cost, selling immediately is smarter than waiting.
- Monitor both futures spreads and your local basis to spot when your elevator is offering wider spreads than the futures justify.
- Use a simple spreadsheet to model three scenarios: sell today, store 3 months, store 6 months—and plug in your actual costs.
Calendar Spreads and How Futures Months Price Your Storage Window
Futures contracts for corn and soybeans trade in specific months: December, March, May, July, and November. The spread between any two months reflects what the market believes storage is worth during that period. A wider spread signals stronger demand later; a narrower spread warns that waiting may not pay.
Harvest typically flows into December contracts. By late summer, you can see what December-to-March spread looks like, which tells you whether it makes economic sense to store through winter. If March is only 5 cents higher than December, and your storage costs are 10 cents per bushel for three months, storing loses money even before accounting for the elevator's bid-ask margin.
Spreads can also invert—meaning a later contract trades lower than an earlier one. An inverted spread signals that the market expects tighter supplies later, or that immediate storage demand is so high that waiting offers no premium. Inverted spreads almost never justify on-farm storage.
| Spread Scenario | Futures Price Difference | Storage Decision |
|---|---|---|
| Wide spread (positive) | March $0.25–$0.40 above December | Storage likely profitable if your costs are 10–15 cents/bu |
| Narrow spread (positive) | March $0.05–$0.15 above December | Storage marginal; calculate your exact costs before committing |
| Inverted spread (negative) | March trades below December | Sell immediately; waiting erodes value |
| High volatility | Spread swings >20 cents within days | Hedging or forward contracts reduce risk; storage becomes secondary to price timing |
The Biggest Mistake — Storing Because the Spread Looks Good Without Calculating Real Cost
The most common error is deciding to store grain because you see a 25-cent calendar spread without comparing it to your actual cost to store. You pay for facility depreciation, fuel or electricity for aeration and cooling, fumigation, insurance, and shrinkage (typical moisture loss and handling waste). These costs vary widely by farm, year, and facility type.
Say you have a 30-year-old grain bin with basic aeration. Your cost-to-store estimate might be 8 cents per bushel for three months. But if you haven't accounted for the bin's roof needing repair, fumigation becoming necessary due to insect pressure, or extended aeration during a wet fall, your actual cost jumps to 14 cents. A 20-cent spread suddenly becomes unprofitable.
The fix: calculate your all-in storage cost once per year. Include facility, energy, treatment, and shrink. Use this number, not wishful thinking, to decide whether a spread justifies storage.
Basis Spreads and Local Elevator Pricing Power
Your local elevator's bid relative to the futures price—the basis—is also a spread you must monitor. An elevator might bid $4.15 for December corn when December futures are $4.20, meaning the basis is –5 cents (typical). But if that same elevator offers $4.32 for March delivery when March futures are $4.40, the implied basis is –8 cents, and the elevator is keeping 3 extra cents of your March premium.
Compare your elevator's basis spread against other facilities within 15–30 miles. A basis spread that widens in spring (your elevator paying a steeper discount for later delivery) suggests weak local demand or tight elevator capacity. Basis spreads that narrow suggest competition, which helps you.
Check your state's current price data regularly to see how your local basis compares to regional trends. Check your state's current price to see reported basis levels and spot outliers at your nearest elevator.
Using Spreads to Time Forward Contracts and Hedging
If a calendar spread is attractive but you want to lock price before harvest, forward contracts let you sell a future delivery month today at a stated price. The spread built into the forward contract should reflect the elevator's costs plus a reasonable margin. A wider spread in the contract than in the futures market is a red flag—the elevator may be overcharging you for storage and risk.
Alternatively, you can use crop price volatility hedging to lock a spring price without committing to storage at a specific facility, giving you flexibility to sell sooner if spreads change. The choice depends on your storage capacity, your confidence in the spread holding, and your risk tolerance.
Spreads narrow unpredictably as contracts approach expiration. A wide spread in late August may collapse by early October if new-crop supply estimates shift. This is why marketing-year-average price thinking protects you—you're not betting on one spread, but on a series of sale decisions across the entire marketing year.
Tracking Spreads Week by Week During Harvest
Set a reminder each Thursday (after the weekly USDA crop progress report) to record December and March futures prices, your elevator's bid for both months, and the implied calendar and basis spreads. A simple spreadsheet with dates in rows and spreads in columns shows you whether spreads are tightening (less profitable storage) or widening (more profitable).
If a spread widens unexpectedly mid-harvest—perhaps due to a weather event or crop damage report—revisit your storage decision. What made sense in August may not in September. Spreads are forward-looking signals; if they change, your plan should too.
The goal is not to predict spreads perfectly, but to understand what they mean for your farm's economics and to act on data, not on hope that prices will keep rising.
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Frequently Asked Questions
What is a commodity price spread?
A commodity price spread is the difference between two prices—typically between futures contracts for different months (calendar spread) or between your local elevator bid and the futures price (basis spread). Spreads tell you whether storing grain or waiting to sell is profitable.
How do I know if a calendar spread justifies storing my corn?
Compare the calendar spread (the price difference between harvest and spring futures contracts) to your all-in cost to store per bushel. If the spread is wider than your storage cost, storage can be profitable. If narrower, sell immediately.
What does an inverted spread mean?
An inverted spread means a later-month contract trades at a lower price than an earlier-month contract. This signals tight supplies later or immediate storage scarcity and almost never justifies on-farm storage.
Why do elevators sometimes offer a narrower spread on March delivery than futures show?
Elevators build in their own costs (facility, insurance, financing) plus margin into forward contracts. Compare the spread in an elevator's contract offer to the current futures spread; if it's much narrower, you may be overcharged.
How often should I check commodity price spreads during harvest?
Check spreads weekly during harvest, especially after USDA reports or major weather events. Spreads change as expectations shift, and your storage decision may need to shift with them.
Can I lock in a spread without storing grain on my farm?
Yes. Forward contracts with elevators, futures hedging, or options let you lock a future price without committing to on-farm storage, giving you flexibility if spreads change.
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