It’s a new year and time for a gut check on your marketing. Instead of tracking percent sold and market value, we took advisers’ sales levels for 2010 and 2011 corn and soybeans and averaged them into a simple Adviser Index (see below).
This index shows the industry’s position and should help you compare sales against the best advisers.
"Due to increased volatility, many adviser services have decided to advance cash sales, rather than attempt to manage futures or options, in a choppy market," says Scott Harms, who runs the Archer Financial Agricultural Hedge Marketing Program. "This has led to overall higher sales levels than last year. Many advisers are reluctant to advise re-ownership strategies in futures or options to offset these sales, especially if they were able to make solid cash-sale decisions."
At time of publication, AgResource Company was unsold. "The cash prices for corn and soybeans was at or near their highs for the year," says Dan Basse of AgResource. "We think that the market will reach even higher levels. This is a bull market we have not seen on a percentage basis since 1973. The returns should more than pay for storage."
Meanwhile, Progressive Ag Marketing got more aggressive with sales early, due to strong prices and concern that markets would come under pressure at harvest.
"That did not happen, as yields were less than expected in the Corn Belt but good in fringe areas," says Progressive’s Randy Martinson. "U.S. ending stocks for wheat, corn and soybeans were projected as plentiful early in the growing season, which helped to advance sales as it appeared that the U.S. was going to serve as the world’s grain bin. That has changed as corn production declined."
Currently, stocks are comfortable and that should result in some premium to be removed from the market, Martinson adds.
- January 2011