The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.
As a leading voice in commodity market news, analysis and advice, Alan Brugler has helped numerous next-generation farmers find their risk management footing. Brugler, who is the president of Brugler Marketing and Management, offers this advice:
Understand Your Marketing.
Start by figuring out your cost of production per unit (bushels, cwt, etc.) using a conservative expected yield, Brugler says. Remember, things change during the season. He recommends selling in a minimum of four to six increments over a period of time, rewarding price rallies and trying to protect against the ”unknown unknowns.”
Look Out for Margin Squeezes.
Don’t let input costs or selling prices float when the other is fixed unless you’re certain about price direction. If a farmer is highly leveraged, a spouse’s off-farm job or a winter job can provide income stability and maybe health insurance. Finding a specialty niche to serve or produce for is helpful as next-gen farmers often don’t have the efficiencies of scale to compete in generic commodity production.
Is 2024 Bearish or Bullish?
Brugler believes several market axioms apply to this situation. First, the news is always most bearish at the bottom and most bullish at the top. If farmers trade the news, they lose. For grains, markets are mean reverting, and currently prices are still above the mean. Without a major assist from Mother Nature, Brugler says rallies tend to underperform. For cattle, don’t count on today’s feeder or calf prices two to three years from now. He believes we’re at or near the top.
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