I’ve been there.
You’re listening to the noon market update on the radio and hear corn is up $.10 cents.
Your local elevator is paying $3.95.
Do you sell?
Is it going higher?
What if you sell now and the market recovers in a month and you miss out?
What if you don’t sell today and the market tumbles to $3.00?
Will I regret not making a sale today if the market goes lower tomorrow?
You don’t make the sale.
The next day, the corn market falls $.20 and the outlook looks poor.
Your local elevator also widened basis, so your cash price isn’t only $.20 lower, but $.25 lower…now they’re only paying $3.70 cash.
On a 10,000 bushel contract, that’s a $2,500 loss in value in ONE DAY.
Now, if someone asks you why grain marketing is emotional, show them that scenario.
There are so many factors (some completely unforeseen and some that make sense) that impact the futures and cash markets.
It’s not an easy task to identify why the market is moving the way it is, or stay up on all the news, export reports, USDA reports and fund positions.
As you try to decipher the market and determine when to sell your grain to be as profitable as you can be, what do you do to manage it all?
Give up?
Nah, you’re a farmer.
You don’t give up…not even when it comes to waiting for a trade deal that’s no closer to being figured out than it was a year ago. 😉
I’ve given this some thought as I’ve experienced the emotional rollercoaster that is grain marketing, and here are my (humble) suggestions for removing some of that emotion:
1. Think about the farm as a business.
Don’t make decisions based on a ‘hunch’ or a ‘feeling.’ Instead, make marketing decisions based on facts, like whether or not the sale is profitable.
2. Don’t ignore your marketing plan.
When you sat down in the winter and developed a plan, setting target prices to shoot for, you made a plan that would be profitable for your operation. That mans that these target prices should not be ignored. Believe me, the second you don’t sell at a target price you identified is the second you’ll regret not sticking with the plan. And blood pumps and the emotions are high when you ignore making a sale at a target price and the market falls the next day…
3. Don’t try to out-guess the market
Even when everything you’ve read, heard and seen points to a higher price in the market, don’t ever expect that it will move where you expect it to move. There are way too many factors at work that you can’t predict, and the market rarely follows an expected path.
Next time you’re caught up in the emotions of marketing, give these three ideas a whirl.
I wish you the best in your marketing this year and hope you’re hitting (and selling at) some of the price targets you established in your marketing plan!
P.S. Don’t ignore those. 🙂