During seasonally busy times, a lot has to get done from an agronomic standpoint. Tractors, planters and other implements are finally rolling after an idle winter. But while you’re scrambling to get your crops planted and off to a strong start, is your marketing plan collecting dust? If so, are you missing opportunities?
According to Matt Bennett, Illinois farmer and commodity analyst with AgMarket.net, a disciplined approach is a 12-month job to avoid pitfalls.
“My go-to that has always worked for me is to try and stay consistent,” he says. For farms that booked a lot of profitable grain this fall and winter, some tough decisions may lie ahead. Pay down debt? Pursue new rented ground? Update older equipment?
Each operation will have its own unique needs, but Bennett highly suggests replenishing your liquidity if it has been drawn down over the past few years.
“Just make sure the farm gets a little healthier,” he says. “We are cautious about how we manage additional revenue because things can change really quickly.”
Although seed prices are already set for 2021, when grain prices go up, most inputs soon follow. For example, farmers who pre-booked fuel and fertilizer last fall likely made a wise decision. Those inputs are the most fluid and have already risen significantly off their lows.
Monitor other input costs closely this year, especially if corn prices stay above $5 per bushel and soybeans stay in the teens – and consider buying inputs in advance if you think they’re on the upward swing. Bennett calls this strategy “booking both sides of the ledger.” Consider if corn prices go up to $6 or $7 per bushel. That’s a profitable crop – but it’s less lucrative if you end up spending $75 more per acre for fertilizer next fall.
Knowing breakeven costs is still perhaps the most important part of any marketing plan, Bennett says. Don’t forget that number is a moving target.
“Any time I make a sale, I recalculate so I know the breakeven for my remaining bushels,” he says. “It takes some time to set everything up, but once you do the initial work, additional changes aren’t that hard to monitor and maintain.”
So even during the busiest times of the year, Bennett is able to spend a little time on marketing two or three times per week.
Still afraid of missing out on a rally? Don’t panic, Bennett advises.
“You can have a bad day or two and still be off very well,” he says. “Being profitable without hitting the high is still more of a blessing than a curse.”
Related: The race for profits starts now