COLUMBIA, Mo. — “If you fail to plan, you are planning to fail.”
Crop farmers ought to take this adage to coronary heart when marketing their grain, advises University of Missouri Extension ag economist Martyn Foreman.
“By outlining a grain marketing plan, producers have a better chance to boost the returns they earn from the large investments they made in producing the crop,” Foreman says in a information launch.
When growing a plan, Foreman says to maintain it easy. By writing a one- to two-page plan, farmers can discuss with it as wanted and have a marketing technique that’s easy to execute and particular to their operations.
Growers want these items of knowledge:
- Expected manufacturing
- Cost of manufacturing
- On-farm storage capability
- Pre-harvest gross sales
- Balance of manufacturing in storage left to promote
- Cash move wants
With this info in hand, Foreman says, farmers can create a plan with 4 parts:
- For unpriced bushels you’ve got in storage, divide these complete bushels into increments. The measurement of the increments will depend upon your money move and different monetary wants.
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Consider promoting smaller increments extra usually somewhat than making two or three massive incremental gross sales, Foreman says. The smaller increments will provide help to to unfold your value danger over extra bushels.
- Establish value targets. In most years, crop costs hit their lows at harvest and steadily enhance by means of the late fall, winter and spring.
Knowing these seasonal value developments, you may set value targets for a good portion of the grain in storage then promote when market costs attain your targets.
Price targets will depend upon a crop’s provide and demand. Based on present market circumstances for corn and soybean, you may take a extra aggressive stance, Foreman says. For instance, you may set targets which can be 20 to 25% larger than harvest lows. In this case, you’d start making incremental gross sales when costs are 10% larger than harvest lows and promote your final increment when costs are 25% larger than harvest lows.
- Set gross sales deadlines. Establishing a deadline to promote acts as a backup plan if value targets are usually not met. You can set gross sales deadlines to satisfy money move wants or align them with seasonal value tendencies so you should still seize seasonal value power.
“If you establish sales deadlines in advance, then they help to dampen emotions associated with making marketing decisions,” Foreman says.
Select marketing instruments to make use of. Outline the way you plan to make use of primary money contracts, together with money ahead contracts, foundation contracts, hedge-to-arrive contracts or different instruments to seize marketing alternatives that will come up.