AMES, Iowa – Having a plan is one of the most important ingredients for marketing both old and new crop corn and soybeans. That plan creates both a purpose and accountability for a farmer to market grain in a more timely fashion.
The reasons a marketing plan is so important and factors to consider when creating a plan is the focus of the Ag Decision Maker article “Developing a crop marketing plan.” The article is written by Steve Johnson, farm management specialist with Iowa State University Extension and Outreach, and is available in the June issue of Ag Decision Maker.
“Farmers need to have an actual marketing plan to overcome the emotion and procrastination that comes with marketing grain,” Johnson said. “In the early summer months, some Iowa farmers are holding their largest amount of unpriced old crop corn bushels in more than 20 years.”
The article spells out five primary steps farmers should keep in mind while developing a marketing plan.
Cost of production, along with how much it will cost to store the grain after harvest and before a sale, must be known so a farmer can determine a good sales price.
Price objectives that reflect both the futures price and cash price received.
Time objectives that mark when that crop will be sold. Uncertainty about the level of that season’s production elevates futures prices in the spring or early summer months, making it an ideal time to sell off portions of an upcoming crop.
Employing a variety of marketing tools can spread risk and attempt to capture futures when prices are high or when basis (the gap between futures price and cash price) narrows.
Write down the marketing plan and note the reason for using a particular strategy or tool. This provides purpose for why a decision was made and can reduce second-guessing when marketing grain.
“Farmers often feel that prices are going to go higher, especially in the spring when the greatest uncertainty in production occurs and prices rally,” Johnson said. “Having a plan, writing it down and sticking to it can help farmers overcome the struggles they have around emotion and procrastination.”
“ISU Extension and Outreach, in partnership with the Iowa Farm Bureau Federation, have created a one-stop shop for marketing strategies, tools and market planning that features a variety of learning activities, videos, workbooks and access to a crop marketing simulation game,” said Johnson.