Take time each week to sit down, think about what the markets are doing and lay out scenarios that could send commodity prices higher or lower. That’s how young farmers can market proactively, says Naomi Blohm, Stewart-Peterson.
“It’s a discipline process where you’re making those plans ahead of time,” Blohm tells “Top Producer Podcast” host Pam Fretwell. “It’s not a reactive, ‘Oh, I guess I’d better price something because the market’s gone up.’”
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Marketing has become trickier because producers must think beyond the farmgate about commodity supply and demand around the world, currency movements, fund activity and geopolitical drama.
To manage around those unknowns, Blohm recommends focusing on factors you can control. Understand your cost of production, and be sure to include expenses such as trucking. Consider historical price movement of the commodities you
produce, understand the levels at which you can be profitable and pull the trigger when profits can be captured.
“The market doesn’t have to guarantee you a profit every year, but if you at least know where your profit levels are, it gives you that much confidence when you need to be actually making those sales as they occur,” Blohm explains.
When deciding how to time sales, visualize a calendar year. In January, producers typically have crops in the bin. They make sales, evaluate remaining stocks and start thinking about what to plant in the year ahead, Blohm says. Between January and April 1, farmers should plugging away at making old-crop sales. They should also begin mapping out cash sales for the new crop because historically, the months of April, May and June provide the best pricing opportunities.
“A lot of times, that’s a tricky thing for some producers to do because they get concerned [about], ‘Well, I don’t know for sure what I’m going to grow, so how much should I be looking to forward contract?’” Blohm explains. “The rule of thumb would be to price up to 50% of your expected production on those rallies as they come. If you have really good crop insurance, you could do more than that.”
Pay attention not only to the board price of grain in Chicago but also to local cash markets, Blohm advises.
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