MSU to Support Grain Marketing Decisions

By Andi Anderson

Michigan State University has released a new Margin Goal Worksheet designed to help farmers understand profit margins and make informed grain marketing decisions.

Profit margins play an important role in determining whether crop prices are high enough to cover production costs and support a farm’s financial needs.

Farmers use margin goals to estimate how much profit per bushel is required to meet expenses such as debt payments, family living costs and other financial obligations.

To calculate margin goals, farmers begin by identifying the total cash flow needs for each crop. These include production expenses as well as other costs the farm must cover.

Once these needs are added together, the total is divided by the crop’s expected production, based on yield multiplied by acres. This produces a per‑bushel cost that helps farmers understand how much income each bushel must bring in to be profitable.

The Margin Goal Worksheet simplifies this process by guiding farmers through all necessary steps. To use the worksheet, farmers must gather information such as futures prices, basis charges from grain buyers, expected yield and the cost of production for the crop.

Cash flow details—including debt principal, family living costs and other expenses—are also needed. Farmers should also know what percentage of these cash flow needs will be covered by each crop and how many acres they plan to grow.

In addition to these inputs, best practices suggest including typical grain buyer charges when estimating production costs.

These may include discount schedules for moisture, test weight or damage, hauling charges and storage fees. These factors can influence the final cash price and should be considered when determining margin goals.

Futures prices and basis values are important parts of grain marketing. Farmers can obtain these numbers from their local grain buyers.

Tools such as Purdue University’s Crop Basis Tool can help identify basis trends, while additional marketing resources are available through Michigan State University Extension’s Commodity Marketing website.

By using the Margin Goal Worksheet, farmers can better understand their financial needs and make grain marketing decisions that support long‑term stability. The tool helps farmers evaluate different price opportunities, plan for cash flow requirements and improve their overall budgeting strategies.

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