The Grain Market Question We Should Ask More

 
The Grain Market Question We Should Ask More

Dave Fogel says predicting grain futures is futile.

This may sound counter-intuitive. Fogel is, after all, vice president of Advance Trading, Inc. – a commodity brokerage firm. “It’s not about predicting, it’s about protecting,” he told Commodity Classic attendees at one of the show's educational sessions.

Fogel  compares grain marketing to watching a movie that’s only halfway through.

“There are a lot of really smart guys who can tell you what’s happened before – and why – but they can’t tell you what will happen next because they haven’t seen the rest of the movie,” he says.

Power Hour Noon LogoIt’s easy to ask the wrong questions, Fogel says. For example, asking why commodity prices are up or down is not the best question to ask, he says. Instead, ask questions such as, “If commodity prices are up tomorrow, what should I do?”

“The No. 1 question that doesn’t get asked is What if?” he says. “That’s why marketing can be so difficult. We tend to wing it and take chances all the time. We shouldn’t mistake marketing with speculation.”

Life will get a lot easier if you can master the following three items, Fogel asserts:

1. Know how basic marketing tools work.

2. Know your crop insurance options.

3. Know when cash markets work to your advantage – and when they don’t.

Fogel has been promoting this “back to basics” approach with his customers. Simple is better, he says. If your marketing strategy takes longer than a couple of minutes to explain, maybe it’s time to revisit it, he says. And don’t be afraid to learn from mistakes others have made in the past, he adds.

“If you don’t know the mistakes people have made merchandising grain over the past 30 years, chances are you’ll make them again,” he says.

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Comments

 
Spell Check

Fish
Argos, IN
3/5/2015 02:22 PM
 

  Pricing ahead always sounds good. The biggest problem is when there is a spike in the nearby as was the case in 2012, the futures carry is usually well below the current futures. Examples- Dec. '13 high was 6.61, Dec. '14 high was 6.16, Dec. '15 high was 6.00 (all recorded around Sept. 2012. All well below the 8.50 recorded in Aug. '12 for the Dec. '12 futures price. Most people, myself included, hate to price too much ahead when looking at a $2.00 difference.

 
 
Zorcon
Western, NE
3/3/2015 07:50 PM
 

  I would agree with his number one. Not sure why you would put crop insurance options in the mix without knowing what your cost of production is and what you need on a per bushel basis to break even. And number three is historical. There are so many variables in predicting the market that no one recipe can work for all. And how many times do you have to have your crop marketed before it's even in the ground? In hindsight, 2015's crops should have been marketed in 2013.

 
 
TY
Tulsa, OK
3/3/2015 09:23 PM
 

  I would agree w/ Zorcon that 2015's crop should have been priced earlier....except it should have been done so in Aug, 2012. And also 2013's, 2014's & 2016's crop if possible should also have been priced. I mean how often does $8.50 come along for corn. Or as another way to look at it.....how many times had $8.50 come along before? Oh....I know....never before! And why would anyone think that $8.50 corn would last forever or be the new norm so that they could just wait until the next yr. & the next yr., etc. to price?

 
 

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