I sold my house about a year and a half ago.
You know what the market did after that?
Skyrocketed.
That’s right. At the time, I thought we were reaching the top. Yet it just. kept. going. higher.
So of course, I kept looking back thinking, “Why didn’t I just hold onto it a little longer?!”
It’s a dangerous thing looking back on decisions. We want confirmation that we made the right decision, and we subconsciously seem to think we can pick the market high.
We can’t.
The same thing goes for grain marketing. Especially in years like this year where we hit new market highs, and then the market continues higher.
Unfortunately, when the market just keeps steadily creeping higher, it actually paralyzes you.
You’re nervous to make a decision because if you sold, you now see the $$ you missed out on as you watch the market surpass your selling price.
Even though you’re better off because you can sell additional grain for a higher price, it’s still hard not to think about what you could have made if you still had that grain to sell too.
So, is there anything you can do to help make the decision making process easier?
Here are three potential marketing options to consider:
1. Buy a call when you make a sale. Sometimes called a ‘courage call,’ buying a call option gives you the courage to make a sale because if the market moves higher, the call option will gain value. And if the market doesn’t move higher, you are just out the investment you made in the call option.
2. Set up a plan for an incremental selling strategy. i.e. set a price target to sell a certain quantity, then a higher price target for another set of bushels, and so on. You can even set firm bid offers with your grain buyer or broker for those price targets so the strategy can execute without your intervention. Those offers are really helpful when you’re busy – you just don’t have the time to watch the markets every second of every day!
3. Use an averaging contract with your grain buyer. These are handy because each day during the specified pricing window, an equal portion of the bushels you put on the contract get priced at the daily closing price. Thus, you get the piece of mind that you’re selling bushels every day. And, in most cases, you get to choose the pricing window.
All in all, it’s not easy to make decisions in this type of a market. It seems like it should be because prices are good and you can’t really go ‘wrong’ selling at these price levels, but it’s easy to get stuck in indecision.
If you’re stuck there, consider trying out one (or more!) of the marketing options mentioned above to help decrease the decision making pressure.