A Q&A about today’s grain marketing myths, mistakes, and moving forward
At CXN360, we are very proud to have team members with diverse experience. We have Customer Experience Reps who have experience in buying grain in Western Canada and they’re full of good advice and suggestions for growers. In this blog we did a virtual round table and posed some questions about grain marketing to two of our team, Brianne and Sara.
What is the most common myth about grain marketing?
Brianne: Most myths about grain marketing are generational. Older generations have seen so many changes in how grain marketing is handled, it is a lot of change and information to keep track of. This can make grain marketing seem less accessible to some farms. The younger generation knows there are a lot of marketing tools out there and have adopted them into their marketing plan.
Sara: I think the most common myth is that grain marketing is complicated. There is a ton of information out there and it can be challenging to sift through. But I think most farmers have a good handle on what works for their farm. For some, adjusting to the ever changing market information is hard.
What is the one thing most farmers should do to get better marketing results?
Sara: Diversify the marketing tools that they use. Make use of all the tools that are out there such as targets/asks, options, alternative grain contracts. But always take into consideration their own risk tolerance. Compare prices/grades at different locations, look for opportunities beyond their local elevator. The world is small with online grain marketing tools available.
Brianne: I agree with Sara. Farmers treat seeding and harvest like a job and that is what they need to do with marketing. It is a full-time job that requires some of their time on a daily basis. I think this is where embracing technology and the access it provides to information is key.
What 1 or 2 things do farmers usually get right when it comes to marketing their grain?
Brianne: Knowing their quality and quantity. Understanding their cost of production and how that impacts their decisions to sell or store grain.
Sara: Farmers do a great job at knowing what they have in terms of quality and the marketing opportunities for that specific grain. Farmers also do well diversifying risk by selling throughout the year into different marketing opportunities.
What part of selling grain seems to cause the most problems for farmers?
Sara: Different companies have different grading factors, spreads and base grades. This can make price comparisons between companies very difficult, especially on crops like wheat.
Brianne: Forward contracting or not understanding the contract. Like Sara said the different spreads, base grades that each delivery point offers can get confusing.
Given the changing grain marketing landscape, what is the one change that farmers have found the easiest to adopt? What has been the hardest?
Brianne: I think the easiest to adopt was their ability to be in a completely open market. They can plan for forward contracting on wheat now, since they are not restricted to unknown delivery times or bulk contracts. The hardest change, in my opinion, is learning how to market grain. Understanding basis, foreign exchange and world markets. The difference between world markets and Canada’s market.
Sara: I think one of the changes farmers have found the easiest to adopt is the amount of choices they have to market their grain. It’s a very competitive landscape with lots of companies looking for grain, which gives the farmer a lot of great options. The change that is harder is the impact of global market volatility on prices. Farmers need to be well informed on so many topics, from weather in South America to current political situations in China and everything in between. Farmers already do so many roles in their daily lives and keeping track of the market when things changes so rapidly is really challenging.
Where do you think grain marketing sits on most farmers’ list of priorities?
Sara: I think this really depends on the time of year and the other demands of the farm. I think it’s always in their minds and technology has certainly impacted how they can market their grain. Information is coming at them all the time but being able to act on it really depends on what else is going on.
Brianne: I believe this is generational. Older generations have gone from a very relationship-based grain marketing era to a completely open market. They were more focused on quality and quantity. The younger generation has come into a technical grain marketing era with world markets vs local markets. They have more tools and resources available now to make marketing more of a priority than it has ever been.
Want to hear more from our team? They love to talk grain marketing. Get in touch.