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Know Your Market

RSS By: Dairy Today: Know Your Market, Dairy Today

Dairy trading experts offer strategies and practical perspectives to optimize market performance.

Marketing Needs Your Time Today

Jul 11, 2011

By Steven Schalla, Stewart-Peterson

It turned out to be a beautiful 4th of July weekend in Wisconsin and, for me, it was a welcomed chance to get outside and work on those summer projects!  I’m always surprised how quickly the day flies by when you keep moving, and despite good progress, there always seems to be something left on the list!  I bet you can relate. 

This is why I can easily understand how finding time for marketing can be such a challenge, especially with summer fieldwork taking extra time.  Like other aspects of the dairy, marketing takes a continuous effort to be successful. 

Especially now, with nearby milk contracts at historically high prices, it is critical to find the necessary time for marketing.  

Milk prices look poised for July to be the first month since June 2008 to have a Class III price over $20.00.  While this is a welcomed accomplishment, history shows that these prices do not last very long.  In addition, the corn market has also taken a big step backwards from the early June highs of $7.50/bu for old crop to just over $6.00/bu for new crop on the Chicago Board of Trade.  If weather continues to be conducive to crop development, grain prices could continue to ease into harvest and provide relief for operations that purchase these inputs.  

With potential long-term trends at risk of shifting and summer markets showing their typical volatility, it’s easy to see why taking the time for marketing is more important than ever.  

To be most efficient, we recommend shifting your focus away from market outlook and instead using Market Scenario Planningsm to devise a strategy that will prepare you for whatever the market does.  There are many opinions about how long these price levels can last or how quickly the market could slip.  Regardless, there are many different tools available to help insure your price.  

Market Scenario Planningsm requires time and can be extremely rewarding knowing that you’ve made decisions to protect what you’ve worked so hard to earn.  If it’s challenging to commit this time, we suggest seeking help from a marketing expert.  By finding a trusted advisor, you can save substantial time as they can help you learn the intricacies of the marketing tools and work to find the strategy that best meets your objectives.  Operations with a management team often find this helpful, as the advisor can blend the different ideas and risk tolerances to arrive at a plan everyone can commit to.  This can be very similar to other resources your operation likely uses, such as a nutritionist, A.I. technician, or agronomist. 

  • For the producer that likes to follow the markets and is looking for a sounding board and trade execution source, the traditional broker relationship can be successful.  Look for the right expert who will serve as an information resource as ideas are shared back and forth.  This will make the time you spend on marketing more efficient and productive.  Understand that the level of communication is often driven by the producer, so being proactive is still critical. 
  • For the producer that has less experience with marketing and has little time or desire to learn, seeking a marketing consultant can lead to the best results.  In this relationship, the consultant will learn all the particulars of your operation and tailor a specific strategy to meet the desired goals and objectives.   Communication and strategy ideas are usually initiated by the consultant with feed-back given by the producer.  This frees the maximum amount of time for the producer and still results in meeting your marketing objectivities. 

Based on your interests and the decision process of the management team, either of these arrangements can be successful in providing the necessary help for marketing while keeping your time focused on other tasks. 

As milk prices reach historical highs and the long-term trend comes into question, finding the time for marketing is critical.  To be most efficient with these efforts, our experience shows that using Market Scenario Planningsm can prepare you for whatever the markets presents.  The time is now to embrace the time constraint of marketing to become comfortable and satisfied with your marketing efforts. 

Steven Schalla is a Market Advisor for Stewart-Peterson, Inc. He can be reached at 800.334.9779 or sschalla@stewart-peterson.com.

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results. Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2011 Stewart-Peterson Inc. All rights reserved.

 

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