How to translate your summer field tour terminology into grain marketing best-practices
I recently published a blog that highlighted the value of sharing more than just agronomic best practices and insight during summer field tours. I also commended FarmLink for their efforts to refresh the old Grain World Summer tours and sharing their data with growers. And, it got me thinking. Most of us come out of the summer tour season with certain verbiage top of mind. How do some of those terms translate when we’re talking grain marketing? Let’s find out. Here’s a list of agronomic terms put into a grain marketing perspective.
Just like managing resistance in the field, you need an all-encompassing supply chain plan for your grain. This means planning what you’re going to store, where you’re going to store it, and how that relates to your contracts. Having bags filled in a field along the back 40 that needs to be emptied in the middle of a January blizzard is an example of a poor plan.
Your goal should be to align your contracts to your grain storage plans. For example, if you know you’re likely to have your canola come off tough, then plan to have some aeration bins ready. But don’t stop there. Evaluate how that effects your first canola contracts and accessing that grain for delivery. Because, let’s be honest. Moving grain needlessly is a waste of money.
Forward contracting is a great tool in your marketing plan. Keeping some grain for cash marketing is like a safe spot (insect refuge) for the bugs in the fields. It’s your safe spot for incidental cash needs. This means not contracting to 100% of production and keeping some grain available to hop on cash grain opportunities or if you have unforeseen cash requirements.
Yes, the old check strip. You do it to see how your crop is performing relevant to your inputs. It’s your “benchmark” so you can make decisions about the effectiveness of your management practices on the field. Well, you also need a “benchmark” when it comes to your marketing plan, and that comes in the form of data that tells you how you’re doing and where you can improve. Data is available through PDQ. But even better, a service like CXN360 shows you get real offers from grain buyers, not just posted prices.
How many different varieties of seed did you look at this summer field tour season? Choosing which varieties to grow is a decision you don’t take lightly. And the seed companies will tell you to make sure you spread out your risk by planting multiple varieties. In grain marketing, that risk management approach is the same. Working with multiple buyers, continually identifying and evaluating new buyers, and spreading your shipping periods around helps you manage your risk. Contracting all your grain to one company for February movement could lead to disastrous results if for example the supply chain backs up like it did in 2018. Like your seed varieties, diversify your grain buyers.
Every year you see new hybrids and varieties in the field during summer tours and in field trial data. They’re new and the seed companies promise great things. But you don’t just jump in with both feet and move your entire farm into the latest variety. You might try it out in one field to see how it fits into your plans for future years. You should take the same strategy when companies offer you new, alternate grain contracts. Try those new alternate contracts but spread the risk around by only contracting a couple loads and not your entire harvest.
Multiple modes of action and group two resistance
Resistance! Resistance! Resistance! You hear lots of talk about it and the importance of crop and pest control rotations. The same can apply to working only with grain buyers who rely on the same transportation and systems. Here’s an example. If you sell most of your grain to two companies who are both on the same rail line you might be setting yourself up for trouble. We know we have harsh winters. We know the rail lines will back up with avalanches or cold weather. It’s part of where we live and what we have come to expect when moving our grain. A better practice is to find opportunities for different buyers and transportation modes. In a blog earlier this year, I talk about how our grain marketing industry has changed from a traditional field-terminal-port approach to a web-like network of buyers. So your options are diverse today and you should take advantage of it.
Proper crop rotation
Like having a good crop rotation, you need to be sure you are balancing fixed prices and futures plus basis prices in all your sales. Having a great futures price with a crappy basis is a mediocre price, so be sure to look at the whole of the equation. Check out an earlier blog The risks of target grain price contracts and how technology helps to understand how to build your strategy.
Early booking discount
You may have left some summer field tours booking your seed for next year. Well, future contracting your grain is like your early booking bonus. We all know that prices are never at their best post-harvest, so future contracting should be a key to your marketing strategy. A big part of that is understanding your costs so you know you’re projected break-even point and can make educated decisions about offers for futures contracts.
A lot of the best practices I talked about in this blog can benefit from CXN360 and it’s features that introduce you to new buyers, give you insight into prices and offers in your area, and broadens your opportunities for sales throughout the year. We’d be happy to show you how it works with a free demo and a conversation about how it can benefit your operation.