In the last column, I introduced data to support the importance of marketing discipline and focus. This data analysis was conducted by Scott Mickey, a former student of mine and a Farm Business Consultant at Clemson University. Utilizing over 30 years of data, he found that it was financially beneficial to market corn during planting versus harvest 75 percent of the time. The average benefit was $0.19 per bushel over this 30-year period of data.

However, the exception was during the great commodity super cycle. During the period from 2008 to 2012 there was a $0.20 per bushel advantage to marketing corn during harvest. This changed the marketing paradigm for many producers, particularly the more aggressive “alpha” farmers who like to hit grand slam home runs.

Now, let’s turn the tables post economic super cycle. The reality of lower prices that have resulted from supply and demand imbalances, a strong dollar, and trade issues have made the “new normal” into the “old normal” in terms of marketing. Utilizing the same analysis of corn price data from 2013 to 2017 finds that discipline and focus has paid off. During this five-year period, it was more beneficial to market corn during the planting window versus the harvest window 100 percent of the time. What is even more compelling is that the average benefit was $0.68 per bushel over this time period compared to the average benefit over 30 years of $0.19 per bushel. This shows that being a disciplined marketer during the planting period paid dividends.

The benefits of marketing during the planting period as opposed to harvest can be viewed throughout the data set. Compared to the five-year period prior to the super cycle, there was a $0.29 per bushel advantage to marketing in the spring. From 1996 to 2000, a five-year period very similar to the past five years, the advantage to marketing during the planting season over harvest was $0.38 per bushel.

The point is that an extended commodity economic super cycle, like what was experienced in recent years, has only occurred three other times since 1910. Those who are stuck to the philosophy that the good times will come back have not realized that marketing based upon the aberration of economic events may not work for the future. Yes, there may be a weather blip that temporarily brings prices back, but true discipline still works.

If a 1,000-acre farm yielding 200 bushels per acre was disciplined in their marketing strategy and received the average benefit of $0.19 per bushel, it would equate to $38,000 of additional annual revenue. Over a 30-year period, this could be $1.14 million of potential earned net worth. In the last five years, the average benefit to marketing during the spring was $0.68 per bushel. Using the same example farm, this would equate to $136,000 of additional annual revenue or more than $4 million over a 30-year period!

Granted, these examples are an all or nothing marketing example, but the extremes of the results will get you to think about developing and executing a marketing plan. Your time is valuable, particularly when you spend it marketing your grain. In this example, if you spent five hours per week or about 250 hours annually in marketing and received $38,000 in extra revenue, then your time was worth approximately $150 per hour.

Check out Marketing discipline and focus: Part 1 here. 

The opinions of the author are not necessarily those of Corn+Soybean Digest or Farm Progress.