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Agriculture

2012-11-19 11:47:52

Marketing my 2013 crop

Q- With the 2012 crop year coming to a close, when is the best time to look at marketing my 2013 crop?

A- The best time to market grain is going to vary from producer to producer. You could ask 10 different people and get 10 different answers. Marketing advisors can show you countless charts and data to give you an idea of when is the best time to “hit the high.” One thing I have learned in my time in the grain industry is that it is next to impossible to “hit the high” all of the time. It is also hard to go out of business if you are making a profit. We have a three-point marketing plan we use to help producers concentrate on profit and block out the added “noise” of generic marketing plans that may end up costing you money in the long run. Point 1: Sell desired profit as soon as possible. I know this is a broad statement, but our first suggestion to producers is to “sell at a profit.” It is up to the producer to decide what his desired profit level is. And no, “all I can get” is not a very good answer. It is important that producers sit down and really figure what input costs are going to be per acre and look at current grain prices. These are necessary pieces of the puzzle when deciding what your target price will be for your crop. In my opinion, the best time to sell grain is as soon as you can sell to cover your input costs plus your personally desired level of profit. A profitable operation is one that will be around next year. Again, focus on long term success, which is derived from profit. Point 2: Turn grain into cash as soon as possible. At the end of the day, you can’t take grain to the bank. Cash is king. We encourage farmers to turn their grain into cash and concentrate on moving forward while remaining profitable. Sell your grain at profitable levels and keep your focus on profit. Long term success is far more valuable than gambling with your grain in an attempt to hit the high. By playing the market you are risking grain prices falling, and also possibly incurring other unnecessary costs, which brings me to Point 3. Point 3: Avoid added marketing cost (storage, value of money, shrink) Most grain facilities charge a fee for storing unpriced grain. So if you decide to take your grain to a local elevator, you will be incurring monthly charges in exchange for the opportunity to price your grain at a later date. If you decide to store grain in your own bins, you will incur a different kind of cost, shrink. Anytime you put grain in a bin, you never pull out the exact amount you put in. It’s always a little less. Not only do you incur some shrink, but you also incur the extra cost of handling the grain. I am not trying to discourage farmers storing their own grain, but it’s important that they take these factors into consideration when they are determining their desired profit levels. With the help of a couple local producers, I put together a spreadsheet to help producers determine their individual profit levels. The numbers used in this spreadsheet are ESTIMATES, and will vary from farm to farm. We figured double cropping wheat and soybeans, no tilling in your soybeans, and cash renting all your acres. I would be more than happy to provide a blank spreadsheet to anyone who would like one. It is a powerful marketing tool to use and a great way to figure your own profit levels. 5 STEP GRAIN MARKETING PLAN Step #1 - Determine your estimated production Step #2 - Determine your production cost per acre Step # 3 - Set a profit goal per acre Goal/Acre SB $200.00 Step #4 - Calculate a target price Step #5 - Take Action!