When it comes to volatility in the markets like what’s happened in recent weeks, many farmers might react with excitement that’s followed by a sense of uncertainty. It can be exciting to see prices that haven’t been seen in quite some time. But it can also bring many questions about what’s yet to come in the market, and the decisions the farmer will need to make.
Farmers often ask what the best approach is to a volatile, uncertain market like what we’re seeing so far in 2021. But there’s no one single answer to that question, and here’s why.
No operation is the same
Each farm operation is a unique entity with many different variables at play – different histories, soil types, financial situation, breakevens, loan responsibilities, on-farm storage availability – and so on. The unique mix of factors that come together to make the farm operation what it is must also help inform the farm’s marketing plans and decision-making.
This includes how the farm’s leaders go about decision-making within a volatile market. Grain marketing is not – and can never be – one-size-fits-all. The marketing plan that’s right for your neighbor down the road – or your peer group member across the Corn Belt – is probably not the best one for your operation.
Here are three ideas to help as you work toward marketing plans and decisions that are best for your operation.
- Build flexibility into plans. Especially when markets are volatile, a flexible, adaptable plan is key to allow farms to take advantage of potential opportunity. Having a flexible plan and working to take a flexible mindset can be helpful when it’s time to make decisions, especially when there’s limited time or information. Thinking or talking through a variety of market scenarios around of time can also help because you’ve already taken the time to work through some of the factors in your mind.
- Keep your eye on the ball. It can be difficult, especially during a busy season like planting, to give the type of attention that a volatile grain market requires. But it’s absolutely key to stay on top of what’s going on in the market in terms of trends and new information that’s impacting it. Carve out specific time for yourself or someone else in your operation to devote to analyzing market information beyond seeing or hearing daily price quotes.
- Don’t go it alone. When the market is soaring at higher levels than usual, it’s even more important to make sure that your farm’s marketing plans and decisions are tailored and targeted specifically to your unique operation and its specific business goals. Sometimes that’s tough to do alone, or even with a small group of leaders on your farm.
Many farmers say working with a market advisor is helpful and brings more peace of mind. Our market advisors work with farmers to create marketing plans and strategies that align with the operation’s goals. You can learn more about our marketing solutions or get a free trial of our market information service at www.waterstreetconsulting.com.