Farm Progress

What to do Next

Richard Brock

October 1, 2012

2 Min Read


A magazine editor once told me that she could take some of my educational articles that I wrote 30 years ago, rerun them today and other than changing the prices, no one would know the difference. She’s correct. Markets change and prices change – but people don’t. The human psychology element of marketing is the same now as it was 30 years ago.

Making marketing decisions is not just a function of having the right information. It is more a function of knowing how to make decisions. And it’s not just a decision of whether to buy or sell. There are three important phases of marketing corn and soybeans. They include:

1.     What to do

2.     How much to do

3.     How to do it

The first one is the easiest. In short-crop years such as this one, markets peak during or right after harvest. We will all look back six months and realize we should have been more aggressive sellers in September.

The more important question and the one that producers face right now isn’t what, but how much. Do you sell half of your 2012 crop? Do you sell all of your 2012 crop and half of your 2013 crop? Somewhere in between there is a happy medium.

The next and last question is how to do it. By habit most producers do not change in this area. If all they’ve ever used is cash contracts that’s what they will continue to use. Some use HTAs. Many used to use futures and options but fewer people do today. After this past year, many of those are coming back. Having too much forward contracted by the end of May, and for those in a drought area they may well have not had enough grain to fulfill their contracts. They wish they would have priced the grain in futures instead of cash.


History repeats

Because of human nature, market patterns almost always repeat themselves. Big bull markets are almost always followed by big bear markets. This one will not be any different. The outcome won’t be the same; it’s just the function of how we get from point A to point B.

In some environments decisions should be based on market outlook. In others, marketing decisions should be based on business bottom line. This was the year for business bottom line. Extremely high profits in a year like this should not be passed up. Forget where you think or want the market to go. Sell at these profitable levels. 

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