Don’t let planting throw off old-crop sales decisions
Farmers have amazing holding capacity: On-farm storage totals 13.2 billion bushels. To put that in perspective, the 2015 U.S. corn crop totaled 13.6 billion bushels. During the slow market grind of 2016, grain bins have allowed farmers to avoid selling.
“We have the ability as farmers to own the excess until we see what happens for prices,” says Jerry Gulke, president of the Gulke Group. “We can hold enough off the market to make them pay more for it, in part, through basis gains.”
Yet flexibility and power has to be balanced with responsibility, Gulke says, especially in light of planting.
“On-farm storage, once paid for, can be a cash cow that generates income through capturing the market carry during times of low prices and excess stocks,” he says.
Return To Normal. The high grain prices seen from 2011 through 2013 made many farmers throw their marketing plans out the window, says Naomi Blohm, senior market analyst at Stewart-Peterson.
“They filled their day with other things,” Blohm says. “Now they have to go back to making time daily to watch markets and make time for creating and implementing their marketing strategies.”
To keep you focused, make time for marketing every week. Write down your marketing plan and review it regularly, transitioning your approach from impulsive to systematic, suggests Jason Moss, chief operating officer at Brock Associates.
“Know your next pricing point so you can make smart decisions at the spur of the moment based on what you’ve written down,” Moss says.
Divide sales into smaller quantities and commit to making them in regular increments, he says.
Price Bounces. Remember seasonal price tendencies. “Print that out and put it on your refrigerator to keep you in reality,” Blohm says.
Also recall weather’s role in price movement. “What are the odds of everyone getting a good crop this summer and us not getting a rally in price?” Gulke asks. “Set target prices and hand over the rest of your old crop if they are hit.”