Overcome the Psychology of Lower Prices

June 17, 2015 12:00 PM
 
Overcome the Psychology of Lower Prices

As the weather shifts from winter to spring, the market also transitions. Even as you plan to plant your 2015 crops, you need to fine-tune and execute your marketing plan for your stored grain.  

Power Hour Noon Logo“The psychology of the situation is that American farmers tend to store a lot of grain,” says Mark Gold, president of Top Third Ag Marketing.” They look for price appreciation as we get into the spring months. If they get it, they are happy.”

But, if prices don’t creep up to acceptable levels, Gold says, farmers wind up with a problem, particularly if 2015 showcases an equally large crop.

To be proactive, Gold says, farmers need to use the proper marketing tools. “You have to look to spend some money,” he says. “There is no cheap or easy way to market.”

His advice is to buy puts.

“The fact of the matter is that in those two out of 10 years that the market explodes or goes higher, yes, we are going to lose the money on the put and sell our grain at record prices.” Gold says. “We can certainly live with that. But, in those seven or eight years out of 10 that the market goes down, puts pay off.”

Gold says grain and livestock producers should consider using puts at part of their marketing plan.


To read more news and find additional information on the Top Producer Seminar or Tomorrow’s Top Producer events, visit www.TopProducerSeminar.com.

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Premier Sponsors: Advance Trading, Apache Sprayers, BASF, Bayer CropScience, Cargill, Case IH, Dow AgroSciences, DuPont Pioneer, ESN, Farmers Business Network, Firestone, John Deere, New Holland, Top Third Ag Marketing, Verdesian

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Supporting Sponsors: FarmLink

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Comments

 
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lefty
asxf, MI
6/18/2015 08:30 PM
 

  I know of one that said to sell all 2015 crop back in 2012. Some are right, some are wrong. Think the best plan is to have one and stay consistent. I bought puts for this year's crop and pre sold 80% if my beans 2015 last year. I think what most marketers want farmers to be aware of all the tools. It's in their best interest for you to do good because you can always fine another marketer.

 
 
Anonymous
Mt. Vernon, IL
6/18/2015 05:58 PM
 

  As Mr. Gold says farmers need to be proactive and use the proper marketing tools. Number one and foremost don't listen to market analysts!!!!! I know one marketing group that told farmers last fall to hold 20% of their 2013 corn crop!! I repeat" 2013 corn crop"!! This group said and I Quote "Better opportunities to make sales will come; only make needed sales". I'm sure glad I didn't follow that marketing advice!! Oh and they have recommended to farmers to hold not only 20% of the 2013 corn crop but 50% of the 2014 corn crop!!!!!!!!!!!!!!!!! My marketing plan is simple, follow the normal seasonal high prices for each grain!! Make sales in 5-10% increments each time the price increases 5-10%and you may be surprised what your overall selling price is!! I bet the overall net price I receive isn't much lower than one that employs a marketing firm that uses options and etc.!!!!!!!

 
 

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