What's Your Grain Marketing Plan?

“I should have sold more corn when it was higher.” Have you said or thought this in the past month or two? I have heard it. My response was, “What is your plan?” Sometimes the response I get is, "I can’t sell now when it is almost a dollar lower than it was a month ago. So, I’ll just harvest the crop, put it in the bin, wait and see what happens."

Marketing decisions and pretty much all decisions are much clearer in hindsight. No one can predict the future so don’t beat yourself up over what you did or didn’t do. Rather, look ahead and plan, write it down, and here is the kicker: refer back to the plan and follow it.

Jessica Groskopf, Extension Educator of Ag Economics at the University of Nebraska, has these 5 simple steps to developing a Grain Marketing Plan.

1. Break the total amount to sell into smaller units.

Break the total amount of grain down into smaller segments, commonly 1,000 or 5,000 bushel increments. Pre-harvest you need to determine your expected yield and shouldn’t sell more than what you are insured for. Post-harvest you should know how much grain is unpriced in the bin.

2. Set price targets.

Determine an average price you’d like to receive and then set price targets around that average. For example, if $6.00 is your average price target, divide your grain into five equal lots to sell and set targets at $5.50, $5.75, $6.00, $6.25, and $6.50. Setting prices at realistic price targets is important. Pre-harvest, ideally your price targets should be higher than your cost of production.  Post-harvest, you should set targets above the price you could have received at harvest plus the additional cost of storing grain.

3. Set sale deadlines.

In case prices don’t come up enough to trigger sales of grain at your target price, you need to set a sales deadline, so you are proactive about pricing and don’t get to harvest without any grain sold. For example: sell 5,000 bushels for January-March delivery at $6.00 or by June 30^th. Prices and sales deadlines work together to help you make sales throughout the year. Consider seasonal price trends and your cash flow needs when scheduling grain sales.

4. Know your marketing tools.

There are several types of contracts you can use to sell grain. We call these marketing tools. You should work with your local elevator or broker to determine what marketing tools are available to you and what tools you should be using to achieve your price targets and sales deadlines. The common marketing tools offered by most local elevators are cash sales, forward cash contracts, basis contracts, and hedge-to-arrive (HTA) contracts. You can also work with a broker to establish hedges, puts, or calls.

5. Share your plan with someone else.

Once you have written your plan, share it with someone else. Sharing your goals with your spouse, business partner, merchandiser, or banker will help keep you accountable to your marketing goals.

Marketing plans can become more complex. However, this basic outline will help you get started. Remember:  the goal of a marketing plan is to keep you on track with the goals you determined at the beginning of the crop cycle.