Do the best-laid plans of mice and men stand a chance when the tractor is rolling during planting?
That’s what a lot of farmers, including Kentucky’s Chris Kummer, worry about during busy times of the crop season. They hate to miss opportunities to sell grain at a profit, while focused elsewhere.
“It’s hard — and I don’t have any magical answers for it,” Kummer says. “Especially if you’re by yourself trying to do everything. It’s tough.”
Kummer takes a two-pronged approach to seasonal marketing. First, he has a written marketing plan that he revises as needed. A plan on paper provides a blueprint and eliminates some of the emotion tied to grain marketing.
“You can’t take emotion completely out of it,” Kummer says. “But planning takes part of the emotion out. There’s always the temptation that the market will go higher, but the key is finding prices you’re comfortable with and capturing them when you can.”
As his farm grew, Kummer developed a good team of employees, the second prong to his marketing strategy. “When I don’t have to be in the middle of everything at all times, it gives me more time to look at the marketing side,” he says.
Angie Setzer, vice president of grain at Citizens, an elevator based in Michigan, says it’s natural to have tunnel vision during planting or harvest. That’s why she likes to suggest an underused tool: open orders.
These orders set targets that let farmers stack together a series of sales that trigger when certain prices are met. For example, a farmer could set up target orders for corn that start at $4, with additional sales that could kick in incrementally if prices were to go higher.
The idea is to remove as much emotion as possible from marketing decisions, which become more difficult to make when a farmer is fatigued or otherwise compromised in the middle of a busy stretch.
“The worst decisions are made when you can’t focus on what’s going to be best for you,” Setzer says. “That’s just human nature. It happens to all of us.”
Of course, marketing from the tractor cab is more possible than ever, thanks to tools like autosteer technology, not to mention smartphones and tablets, says Bryce Knorr, Farm Futures senior grain market analyst. Getting quotes and commentary is easier than ever, and social media channels offer a near real-time glimpse into breaking news that impact grain markets.
That unparalleled access shouldn’t eschew a solid marketing plan. Think of it as a battle plan — and don’t forget to bring it with you into battle. “Keep a summary of your plan stored on your phone or iPad, or stuck on a Post-It note in the tractor cab and pickup truck,” Knorr says. “This ensures you’ll review the plan and know when your targets are close.”
Knorr also recommends farmers do a gut check when the market approaches a fill. It may pay to ask a few questions at that time.
“Are the assumptions in your plan about fundamentals of supply and demand still valid?” he asks. “Do price charts suggest something else is happening in the market, either bullish or bearish? If so, you may need to adjust your targets, but it’s always a good idea to have a process in place for doing this ahead of time.”
To be at ease selling, know what the impact of each sale truly is, Knorr says. Will pulling the trigger bring a profit? If yields fall short of plans, how is that affecting cost of production per bushel?
“Having a what-if analysis makes it easier to sleep at night and can help you make midcourse adjustments,” he says. “Using options might be preferable to straight cash-forward contracts for those unsure about yields.”
It may feel like one more chore, but these preparations are just as important as putting the crop in the ground this spring.