Take Control of Your Grain Marketing
While marketing will never make most growers’ top 5 (or even top 20) list of favorite parts of farming for a living, successful selling is vital to long-term farming success. All the bushels get sold eventually; without a plan, it happens when cash flow or logistics force it to happen – and there is no guarantee that the results will be good when you sell because you’re forced into it. Here is a simple roadmap that will help you take control of your marketing.
Make a Plan
While there are many unknowns at the beginning of every growing season, there are also quite a few knowns that will help you build a foundation for your plan.
What’s your number?
This can be figured per bushel, per acre, for your whole operation, and maybe a few other ways. The important thing here is to arrive at a revenue number that you know you need to achieve for your operation to keep going.
What times of year do you always end up selling? These will almost always be centered around cash flow and/or logistics, and they aren’t likely to vary much from year to year.
Once you have a revenue goal, you can calculate price per bushel. While yield is never known for sure until harvest, the same APH numbers that lenders and insurance use are a reasonable place to start. Then comes the most important part. Human nature makes it very hard to maintain discipline when prices are moving. Entering firm offers (aka Target Contracts) puts some teeth in your plan and makes it more likely that your plan will be enacted. Target Contracts are free and available for any commodity or delivery slot so they are applicable to all the bushels you need to sell.
Corn, soybeans and wheat all have seasonal price patterns that emerge over time. They are no guarantee of how prices will behave in any given year but they do show that in general, uncertainty creates opportunity to sell. As uncertainty decreases, prices tend to drop as well. It’s important to have a Plan B for those times when your Target Contracts aren’t filled. This doesn’t have to be complicated – a few review dates and if/then statements will do the job nicely. (Example: I will review my corn sales and unfilled target contracts on August 1. If I am comfortable with the amount I have sold, I will do nothing. If I don’t have much sold yet, I will sell 15% at the current price and lower my remaining targets by 10%).
All farm planning is based on long term production averages and there will be some years when production is below average. Rather than let that stop you from acting in the majority of years, base your plan on what happens most of the time and be sure you understand your options when the unusual happens. Ask us about how revenue insurance works in different scenarios, how Minimum Price Contracts can let you lock in a price floor but still have the chance to catch a rally, and how we can help you when production shortfalls endanger your ability to deliver on contracts.
Marketing can be hard. A plan will help make it easier, and we are here to help from planning to delivery and beyond.
Looking for CCA Certified Agronomists to help maximize your profitability? Contact Deerfield Ag Services at 800-589-8606