The Business Of Grain Marketing

We’re five-years into a depressed agricultural grain market and it looks like 2018 may be a continuation. We have more corn in the bins than the demand for it, so that means farmers have to spend more time on marketing and financial dynamics.

Jim Knuth is a senior vice president with Farm Credit Services of America. He says if you chase that last dollar by trying to time the peak of the market, you’ll rarely catch it. Your strategy should include understanding seasonal future price trends.

"Which months am I most likely to hit the top third of the market, and proactive means I sell into a rising market," says Knuth. "Well that seems commonsensical, but I can tell you human nature tends to make us do exactly the opposite."

You sell five-thousand bushels at $3.85. You feel pretty good. But a few days later the market goes to $3.95 and now you have regret, so you sell another thousand bushels. A few days later, the market rises to $4.05. You’re filled with regret and hold onto the grain, sure that the market will go even higher to $4.50.

"And it goes to $4.20, maybe $4.25 and it goes back down, and I suddenly realize I ran away from a rising market rather than selling into it. So in marketing, in agriculture, as the market rises, typically you want to sell more bushels each time," he says. "Forget the regret, forget the timing, so that way you can sell a majority of your production in the top third of the market."

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