As I visited with producers at Purdue’s Top Farmer Crop Workshop this week, it became even more clear to me how much '08 and '09 crop producers have left to price.
The conversations went something like this: “Woulda, coulda, shoulda…”
As prices began dropping in early '09, producers didn’t want to sell on the way down, so they didn’t sell. Then prices fell some more, and many didn’t sell because prices might go back up. Now they don’t want to sell because prices are even lower and they feel like they missed the boat.
It’s utter paralysis.
Why all the hesitation to get the crop sold? In my opinion, it’s lack of discipline.
Top Producer’s survey of its readers (Mortal Sins of Marketing, December 08) is very telling:
- 61.6% of respondents get caught up in the excitement of a rally and don’t price
- 73% of respondents said when prices are falling they don’t price because they hope prices will rise
That’s consistent with our surveys of well over 1,000 producers at workshops. Two thirds of those producers surveyed say they know when to pull the trigger, yet they do not execute and get it done.
What about you? If you have significant crop left at this time of year with a good crop in the ground, you know that it is more likely that prices will fall some more before they go back up. That’s seaonality. If you’re holding on to crop now, it’s generally wiser to sell now, take what you can, and buy some back if prices rally after harvest.
Again, developing your set of strategies and the discipline to act helps prevent the “woulda coulda shouldas.” No matter how much money, time or knowledge a person has, marketing falls apart if there is no discipline. You need to have the discipline to develop your strategy, track the indicators that you are using, and implement your strategies when the signals are hit.
DOES THIS EXAMPLE SOUND FAMILIAR? You have a trigger point you decided on many months before and reaffirmed many times over. When that signal is hit, however, you don’t follow through because there is some market news that sounds just too tempting. You hear that China may buy and you think, “I’ll just wait a day.” When China doesn’t buy, the market falls apart, and you regret your decision to wait. Now the price is too low, so you wait and hope it bounces back. But then it declines some more, and then more, and then more. In the end, despite a very well thought out plan and strategy, you never pulled the trigger to make the sale. The best strategy is worthless without discipline.
For some readers, it may sound as if I repeat this mantra over and over again. It’s worth repeating, because producers by their own admission struggle with paralysis over and over again. I’m here as an objective analyst of price patterns and producer behavior over the year, and I firmly believe that emotion needs to be removed from the process. Develop the discipline to get the sales made.
Scott Stewart is president and CEO of Stewart-Peterson, a commodity marketing education and advisory firm based in West Bend, Wis. You may reach Scott at 800-334-9779 or email him at email@example.com.