Want me to tell you a sin I committed Sunday evening (1/3)?
I did what every good marketing advisor says you shouldn’t do.
I checked to see if there was a way to remove the firm bid offer we had in for $4.75 cash corn for February delivery to our local grain buyer when the market was getting close to filling it…
I can’t believe I just told you that because it goes against everything I believe in, but hey, it’s a new year.
And this year, I want to be more transparent around what we’re actually doing and thinking about when it comes to grain marketing on our farm.
This is real life for us, just like it is for you.
So why did I want to remove an offer that was about to fill for a price we’re targeting?
It’s on our marketing plan, it’s profitable, it’s a price we’re happy to receive after several years of poor prices…so what the heck?
Because I was letting my emotions get the best of me, that’s why.
I was sitting there watching the overnight trading session thinking,
“But what if it goes higher, we don’t want to limit ourselves?! Maybe we could get $5!”
I know better than that.
I know better than to let the emotion of a rally cloud my vision.
I know better than to think I should try to predict the market and ‘bet’ on higher prices when there’s an equally good chance it could go lower.
So after all that, here’s why I like offers and why I think you should consider using them if you don’t already.
Because I couldn’t take that offer out on Sunday evening, it filled. And then on Monday, when I was sooo nervous we were going to miss out on another big up day, the market finished lower.
And the cash price for February closed at $4.64.
So that’s why I like offers – they keep you disciplined.
If you’re new to firm bid offers or orders, here are a few key things to remember:
– Offers/orders can be used in the cash and futures markets:
You can put in offers with your grain buyer for a variety of cash contract types, or put in orders for futures or options trades with your commodity broker.
– FBO = Firm Bid Offer
A firm bid offer automatically executes (i.e. creates a contract) if the market trades through the price you were targeting with the offer.
– GTC = Good till cancel
The order will remain active and able to fill until you cancel it. So be sure you keep tabs on what active offers you have out there that could execute!
– To create an offer, you’ll need to decide on the price you’re targeting, contract or trade type, bushel or contract quantity, and the offer/order expiration date.
– Offers/orders can fill during the either the day time or overnight trading sessions
Use offers as a tool to help you execute on your marketing plan and stay disciplined. I know we’ll continue to do so on our operation.