Grain Marketing Tips
Posted: August 21, 2012
When discussing grain markets and grain marketing strategies, I try to keep a few key concepts in mind:
- Individual farms have individual family expectations, financial needs and ability to tolerate risk.
- No one can predict the future.
- Tools are available to capture current market prices.
- Revenue based crop insurance is the base upon which to build a meaningful grain marketing strategy.
- There is no standard answer to marketing concerns.
- Similar to other production expenses – price protection has a cost.
When we focus on net returns adequate to meet our needs and expectations, opportunities available in the market may be more apparent. I suggest considering securing a good average price and to not concern yourself too much with getting the “highest price.”
One reason we may feel so insecure when making grain marketing decisions is due to the huge amount of information we face. I certainly enjoy studying and discussing how markets got to where they are, where markets are going, and of course, why everybody else is wrong in their guesses. Unfortunately, I also believe in point “2” above. To me – all market commentary amounts to so much guessing.
Understanding the price protection tools we have at our disposal does give confidence in decision making. We are better able to balance our needs, expectations and capacity to absorb risk against current prices. We may also be able to stay a little more flexible for when market conditions change.
Do you have fire insurance on your house, barn or other buildings? Do you have health insurance? Are you expecting to make a profit if you experience a fire or health problem? I doubt it. We typically purchase insurance meeting our risk tolerance needs with an eye on what we can afford. So it should be with crop insurance. Being aware of the current crop conditions in states to our west reinforces my commitment to enhancing everyone’s knowledge of crop insurance products.