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A new challenge

Agriculture.com Staff 02/16/2007 @ 1:11pm

Farmers are facing one of the most challenging years ever when it comes to marketing.

With new crop futures trading over $4 for corn and $8 for soybeans, farmers need to think about making significant marketing decisions soon! 2007 corn is providing historical opportunity to lock in the best prices ever. However, the trend is up and prices could yet possibly explode.

What happens if weather is a factor? What happens if acreage is greater than a 10 million increase from year ago? What happens if China has a poor crop? The "what if" questions could go on and on and on. Farmers are faced with having to make decisions without known information.

This "information dilemma" is often what causes inaction. Inaction in an up-trending market is fine, but at some point this strategy fails, and usually miserably. Farmers are faced with a golden opportunity to lock in long-term value for 2007 and beyond. However, if this year's rally is just the tip of the iceberg, you could make a major blunder by selling too much too soon. So what should you do?

The answer? Be strategic. You need to position yourself to maximize opportunities and minimize risk. How is this done? By being prepared. Understand marketing tools! As a professional farmer, you need to take the time and effort to understand your marketing alternatives. Do not take the word of someone else, or give your crop away to just anyone who says they will manage it for you. What you need is someone knowledgeable and experienced to guide you through different strategies that fit you. First, we believe it is important you recognize that prices could totally collapse or they could rally to unbelievable levels. Second, ask yourself what you are going to do in either scenario.

Will you have enough grain sold if prices move significantly lower? Will you have too much sold if prices move higher? While there are no easy answers, we find that farmers who are strategic in their planning prepare themselves for just about anything the market dishes out.

As the old Boy Scout motto goes, "Be Prepared." This applies to farm marketing now more than ever. You may feel overwhelmed, but embrace the challenges that lie ahead. This winter, put a huge effort into planning for the "what ifs." Opportunity is knocking!

If you have any questions, comments or would like us to outline a strategic approach for you, please contact Top Farmer at 1-800-TOP-FARM, ext. 129.

Farmers are facing one of the most challenging years ever when it comes to marketing.

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