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Start somewhere

Agriculture.com Staff 04/16/2010 @ 4:41pm

Inevitably, we all look back and have some regret in what we should have done, especially when it comes to marketing.

Often we get complacent in bull markets or rallies, only to find out that we didn't do enough when prices offered good value. Most farmers we have surveyed suggested that they know when they should pull the trigger, yet often fail to do so. Why is that? For many, it is a matter of time or discipline. While prices may offer opportunity, no one wants to get caught selling too soon, only to have a major bull market, such as was the case two years ago. In the end, however, selling value makes sense.

You have to get started somewhere. How do you determine where? We encourage producers (milk, livestock, and grains) to determine the level they should begin making 10%, or even up to 25%, forward sales. This level is often defined by return on investment or at a minimum value. Everyone hopes that their first sales are their worst sales. With the amount of regret that occurred after the January USDA Supply and Demand Report, it is clear that many producers knew they were in a position to make money (assuming an average crop of 2010), yet failed to pull the trigger to get started. If all else fails, sell a rally. Selling rallies can keep people in business. Often rallies fail. When they do fail, they generally do so in a very unforgiving manner.

There is an old saying we often hear: People never go broke taking a profit. Sometimes the market doesn't offer you a profit. However, if it is close to a breakeven and the market is giving sell signals, especially after a rally, it is still beneficial early on in the sales process to make a sale. If prices continue higher, sell again and average upward. You will eventually average yourself into a favorable position if the market provides the opportunity. If prices turn and head lower, you have at least limited your losses on some production and helped your bottom line.

If you have questions or comments, contact Bryan Doherty at Top Farmer, 1-800-TOP-FARM extension 129.

Inevitably, we all look back and have some regret in what we should have done, especially when it comes to marketing.

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