How do I get the best price for my grain year in and year out? What is the difference between cash sales, storage, forward-contracting, hedging and options? And do women make better grain marketers than men?

Farmers are usually very good at producing crops, but profit often comes in the marketing of that grain. That’s why Dakota Farmer editor Sarah McNaughton and Nebraska Farmer editor Curt Arens chose Farm Futures market analyst Jacqueline Holland as the first Deep Dive guest for their new Farm Progress podcast, FP Next.

Burning questions

In this episode, McNaughton and Arens quizzed Holland on those burning questions. Gleaned directly from the podcast transcript, which can be heard here, here are some of the questions they asked and Holland’s answers, delving into what you need to know about “Grain marketing 101”:

Explain some of the basic keys to successful grain marketing for us. Last Thanksgiving, when I was back home on my parents’ dairy farm, a 300-cow dairy in northwestern Illinois, I was helping with chores and bookwork, and I had this really big revelation. The most important factor about marketing that gets left out of many discussions is that it is about timing.

Timing is so important for production agriculture. The timing of when we get our bills doesn’t always match up with the timing of when we receive our paycheck. For example, row crop farmers have to pay for all of their inputs months before the crop is harvested. For cattle producers, they are paying for feed on a monthly basis, or even more frequently.

You have these time lapses, biological lags, when your operation is more exposed to price risks. You know, there’s always a risk that when you decide to plant more corn or soybean acres one year, that by the time you harvest them, the prices for those crops will be lower than when you set out to plant those crops. So, marketing, in a lot of these tools that we talk about, is a way to reduce those price gaps, so that you can lock in your profits ahead of time.

For producers, what are some of the tools they have to potentially lock in those profits?

There have been some studies out there that suggest that women may make better grain marketers than men. What do your experiences tell you about this? I can’t speak to the to the exact data, but when I was doing my master’s thesis, I surveyed large farm owners. In the data set that I analyzed, we found that women tend to be much more conscious of financial operational performance than men, and they are much more willing to forego relationships with specific brands or specific retailers if performance isn’t up to the farmer’s standards.

A lot of women have been involved in farm business management in these operations for a long time and it’s a really great quality that women tend to take a longer-term approach to strategic decision-making. Women tend to be very aware of when bills need to be paid, how much is needed and when they are due. They’re planning not just for the next price cycle, but for generations, and women tend to have a more risk-averse profile.

Where do you start and how do farmers develop the best marketing strategy for their own operation? The easy blanket statement is that you have to figure out your farm breakeven. But I think it’s more intricate than that. First, you have to look at your own operational needs and at the timing of your cash inflows versus when expenses are incurred and when they are due. You have to be able to be comfortable doing unit conversions, so you can home in on those managerial targets that’ll give you the breakevens that you want to find.

Then you want to look if there are variances when you’re experiencing these cash inflows and outflows. Do you want those to match up with certain cycles? In the grain market cycle, you have to account for what kind of cash reserves you want to have on hand. What are your goals on paying for bills, i.e. common bills versus equipment payments versus real estate loans? Those are all due at different times, so they require different revenue sources.

Finally, the crop insurance that USDA Risk Management Agency offers does an incredible job of helping to offset serious systemic price risks to farmers. If you can get part of your crop even partially covered with good crop insurance, that’s actually one of the best first steps in marketing. From there, you can kind of determine how much of your crop you want to protect and what marketing tools work best for your farm.

To learn more about the next grain pricing opportunities and the resources that experts like Holland use to develop market strategies, be sure to catch the entire FP Next Deep Dive episode.