Do bull markets motivate or paralyze you? Do you stay active in updating your projections or sit on the sidelines watching prices tick up?
“Unfortunately, when the market just keeps steadily creeping higher, it actually paralyzes you,” says Britany Wondercheck, Nebraska farmer and founder of the Farm Girl Next Door blog, which is an educational resource on grain marketing. “You’re nervous to make a decision because if you sold, you now see the money you missed out on as you watch the market surpass your selling price.”
Check the latest market prices in AgWeb’s Commodity Markets Center.
So, is there anything you can do to help make the decision-making process easier?
Wondercheck says these are three potential marketing options to consider:
1. Buy a call when you make a sale.
“Sometimes called a ‘courage call,’ buying a call option gives you the courage to make a sale because if the market moves higher, the call option will gain value,” she says. “If the market doesn’t move higher, you are just out the investment you made in the call option.”
2. Set up a plan for an incremental selling strategy.
This is essentially setting a price target to sell a certain quantity. Then a higher price target for another set of bushels, and so on.
“You can even set firm bid offers with your grain buyer or broker for those price targets so the strategy can execute without your intervention,” Wondercheck says. “Those offers are really helpful when you’re busy – you just don’t have the time to watch the markets every second of every day!”
3. Use an averaging contract with your grain buyer.
Wondercheck says these contacts are handy because each day during the specified pricing window, an equal portion of the bushels you put on the contract get priced at the daily closing price.
“Thus, you get the peace of mind you’re selling bushels every day,” she says. “And, in most cases, you get to choose the pricing window.”
Wondercheck is quick to admit making decisions with today’s prices is not easy.
“It seems like it should be because prices are good and you can’t really go ‘wrong’ selling at these price levels, but it’s easy to get stuck in indecision,” she says. “If you’re stuck, consider trying out one (or more) of the marketing options mentioned above to help decrease the decision-making pressure.”
To read Wondercheck’s blog, sign up for her online marketing class or find other resources, visit farmgirlnextdoor.com.
Check the latest market prices in AgWeb’s Commodity Markets Center.
