Given all the volatility we’ve seen in the markets, producers need to give some consideration to the psychology behind their marketing, says Gabe Sheets-Poling, Sr. Sales Trader with Cargill Risk Management. Sheets-Poling spoke to farmers at the second annual Farm Journal Media Marketing Rally held this week near Chicago.
"So much of the decisions we make in marketing are based on how we frame that decision," says Sheets-Poling. For example, when Sheets-Poling talks to producers about why they don’t hedge, they often say it’s because they would "lose" the chance to participate in market gains.
"It’s the word ‘lose’ that sets you up for failure," he says. "It’s important when making trading decisions to think about outcomes in the most neutral language you can think of."
So instead, he suggests that a producer should think about a hedge as an opportunity to "lock in a 100% guaranteed price" and remove market exposure.
"Behaviorally our first priority is to make decisions that avoid loss," Sheets-Polling adds. "We play not to lose. Keep that in mind when making marketing decisions and make sure you have not framed the choice as a reason not to sell."
Some tips for putting yourself in the best mental position to make a marketing decision include:
- Consider how you are framing your marketing choice.
- Put a plan in place when you are not stressed to make a decision at that time.
- Recognize that rarely a decision is made to sell every penny.
- Make your decisions in the morning, when you are fresh and not tired from the day.