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Keep Grain Marketing Cool When Summer Trade Heats Up

It happens nearly every year; the summer weather rally. Historically, it occurs during the month of June or early July. Seasonally, that is also the best time to capture cash marketing opportunities for new crop sales. Yet emotionally, it is hard to forward contract your crop when it looks less than stellar growing in the field, with the hot summer sun beating down. 

You know that feeling; the cash and futures markets are starting to rally. You know in your gut you ought to be selling something, but you freeze in fear. Thoughts you ponder: What if it never rains again? What if you don’t even grow half your expected crop? What if you sell now, and the market goes up? Those are very real thoughts and emotions. Here are some steps you can take now to help control your “summer weather rally emotions” later.

Write It Down!

Get a notebook, grab your laptop and make your plan NOW. Know your cost of production. Know your weighted average price for any sales you’ve already made. Make different scenarios on paper so you understand what your weighted average price is if you made a 10% cash sale, a 20% cash sale, and other cash sale levels. After you’re satisfied with your math, write down all the grain market fundamental factors occurring in the market. Make note of what’s happening that day, week or month. This will help you to justify your plan of action.

Call the Elevator, Ethanol Plant or Feed Lot. Place Your Orders!

Do it. Once your plan is set, pick up the phone, and call them. Place your orders. If your order is working as an open order that means it can get filled at night, too! Sometimes the markets have great price action in the evening, and your order can get filled! Also, you’ll peace of mind that your order is working. This gives you confidence that it will get filled. Instead of the usual thought, “Oh, I’ll give them a call if I see the market rally.” Pretty soon you get busy, or distracted, and you never make that call. Then you end up not pricing your grain according to your marketing plan!

If I could offer a suggestion, “scale step up” your sell orders. Meaning, make a 5% sale at $4.14, another 5% sale at $4.19, and another 5% sale at $4.29 and so on. It works for many producers, rather than a “all or nothing” price order sitting at $4.50 December 2018 futures.  BIG hint, hint, hint, hint. Don’t place your orders exactly at round numbers such as $4.50. While that may be a technical target on charts, put your order at $4.44-1/4 so you have better odds of getting your cash order filled!

Stick to Your Plan. Don’t Cancel the Orders.

Enough said.

Choose to be disciplined, understand the parameters of your crop insurance, be confident in your cost of production calculations, stick to your marketing plan and pull the trigger to make that cash sale. This is how you get paid for your hard work!

If you have questions, you can reach Naomi at nblohm@stewart-peterson.com.

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Neither the information presented, nor any opinions expressed constitute a solicitation of the purchase or sale of any commodity. Those individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report.  Futures trading involves risk of loss and should be carefully considered before investing.  Past performance may not be indicative of future results.Any reproduction, republication or other use of the information and thoughts expressed herein, without the express written permission of Stewart-Peterson Inc., is strictly prohibited. Copyright 2018 Stewart-Peterson Inc. All rights reserved.

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