I’m a bargain shopper, and I’d be willing to bet money that you are too. Why am I so confident? Because you’re a farmer, and farmers live for a bargain and wheel and deal like it’s their job (which, it kind of is).
The other day I was on the hunt for a new purse but, of course, I wanted a steal. I was in between browsing mode and desperation, which means a deal was the only way I was going to make a purchase. I was perusing the sale section of some of my favorite websites and found a purse I liked, but it was still above the price point I’d mentally established.
At that point, I found myself wishing I could just set the price I was willing to pay and let the site notify me if/when the purse hit that price. Or, better yet, just trigger the sale if the price hit what I was looking for! But since that doesn’t exist, I get the privilege of remembering to come back and check the site every couple of days to see if the price has moved…
Setting a price target and letting it execute for you seems like such a great idea, why aren’t more places doing that?!
Oh wait, your grain elevators and commodity brokers ARE.
Why don’t you use offers when it comes to selling grain?
Are you scared that if the offer hits and your contract is made, the market will continue to rally?
Are you nervous about deciding what price to establish the offer at?
Are you unfamiliar with the process so you’re avoiding it?
Is your price target in mind waaayy above the current market price, so you think it’s a waste of time to put in an offer that’s not ‘realistic’?
Maybe you have other fears too, I don’t know. What I do know is that all the fears above are no reason to avoid using offers. They are such a great way to execute a marketing plan without having to stress yourself out about watching the markets 24/7 and they give you a much better shot at actually contracting at the price you’re looking for.
Let’s be honest, you can’t sit in front of your computer or check the markets on your phone every second of the day or in the overnight trading session. Not to mention, your grain buyer isn’t even open during the overnight trading session, so you couldn’t call to sell cash grain anyways!
So why do we think it’s attainable to “catch” the price we are looking for when we check the market intermittently over the course of a day?
The best thing about offers is that they execute FOR you if the market trades through the price you’re targeting. That’s right, no intervention is need from you if it’s a firm offer.
(BONUS: most offers with grain buyers will execute during the day trading session OR the overnight session, which gives you the opportunity to capitalize on a rally when the grain buyer isn’t open!).
So, let’s make sure you’re prepared and understand how to put in a firm offer in with your grain buyer. Here are the 5 things you’ll need to do:
- Call and ask to place an offer
- Know the delivery period you’re placing the offer against (i.e. October delivery)
- Give the price you’re looking for (it’s ok if it seems optimistic for where the current market is at the time–you never know what the market might do!)
- Tell them how many bushels you’re willing to sell at that price
- Know how long you’re willing to leave the offer running (i.e. 15 days, 30 days, etc.)
If market trades through the price and your firm offer hits, a contract will automatically be created according to the criteria (above) that you set when the offer was created without you having to do any additional work!
If you have a few price targets in mind, don’t be afraid to put in multiple offers for different prices, delivery periods, and bushel amounts. This is a great way to execute your marketing plan with little manual effort after it’s established. I’ll cover the importance of a marketing plan (and how to establish one!) in a later post.