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Market Environment Commands a Marketing Plan

Harvest is wrapping up, most farmers this year have stored as much of their crops as they can and now wait for higher prices to market this year’s production.

As part of its advisory service, Cargill uses this time of the year to sit down with customers and go through the past year’s marketing decisions to determine what they could do differently the coming year.

Carrie Johnson, Cargill Ag Marketing Services (CAM) product line leader, says a goal-setting grain marketing strategy for farmer-customers helps to evaluate success and determine changes that need to made for the coming year.

“We tilt the focus to what is the goal for each farm. Because each marketing plan should be individualized to that farm,” Johnson says.

When setting goals, farmers should consider whether they want to expand their operations, retire, pay for their children’s education, and any other business decisions and needed returns to accomplish those goals.

“This does more than just defines success,” Johnson says. "This sets the business plan for grain marketing.”

Catching Opportunities

From a behavioral perspective, although profitability in the corn market might be reached at $3.75 per bushel, there are times when farmers have the tendency to not pull the trigger, Johnson says.

“So what we are saying is to use discipline by setting goals and know what it takes to reach them. If $3.75 is a good number for your farm, have offers out there. Let’s have strategies in place that we take advantage of those profitable opportunities in this low price environment.”

Being Helpful

“It’s important as advisors to know what pricing opportunities are out there for our customers,” Johnson says. "We like to say that we really work toward profitability, but the Chicago Mercantile Exchange doesn’t care what the farmers’ breakeven level is necessarily.”

Because of the volatility in the market and sideway price movements, farmers should have offers in place to be able to move quickly, she says.

Cargill Strategy

The company’s CAM services approach of putting together a total portfolio grain marketing plan takes into consideration the market environment.

“When you are working through weather markets, farmers have to figure out what old crop needs to be moved out of the bins, while focusing on growing crops. We help them determine whether price floors should be put in place that can leave the upside open with crop-weather issues. Do we use collars and three-way strategies? These are all considerations that we can use during those weather market times,” Johnson says.


Perhaps this year, more than ever, a successful grain marketing plan will come down to timing, Johnson says.

“At CAM, watching the markets is what we do everyday. But, for our farmer-customers, we are looking at the longterm and not looking to hit the top of the market everytime,” Johnson say.

She added, “When we had some profitable levels, earlier this year, we were pretty aggressive and that turned out to be the right move for our customers.”

By selling earlier, this has allowed CAM to work through the overhanging issues like the U.S., China trade tariffs, a large U.S. crop size, etc.

“There are some real price supportive global consumption stories out there that are more likely to play out in the back half of the year,” Johnson says.

So, having that grain marketing plan in place, puts you in a spot that you don’t have to make knee-jerk decisions today, she says.

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