A market analyst says farmers should consider making smaller and more frequent sales to improve their grain marketing strategy.
Bryan Doherty with Total Farm Marketing says getting started can be the hardest part, “If you sell some early, it’s easier to sell more on a rally.”
He suggests rallies can be short-lived and futures prices can drop quickly, “And it’s really hard to catch sales on the way down. So, a lot of times farmers say, well, as long as it’s going up, I’ll just be patient. But when the market tips over, the drop can be so quick and so fast it’s hard to get enough sales in place.”
Doherty says, “Farmers should capitalize on their confidence to produce a good crop when they’re looking 3, 6, 9, 12, maybe 18 months, maybe 2 years before harvest. If they have higher preferred prices and carry in the market, that may be a value proposition for them to get some sales on the books.”
He says farmers can set predetermined price levels where certain sales are triggered and can sell by a calendar, which helps make smaller sales.
EDITOR’S TAKE:
This strategy is a lot like dollar-cost averaging into the stock market, i.e. consistent investments on a regular basis that average out risk over time. Mr. Doherty is simply urging farmers to sell smaller amounts on a more consistent basis to help average out risk and price fluctuation. We all know how quickly markets can turn, especially in volatile times. There is certainly some logic to what he is suggesting. Often times farmers/ranchers see prices escalate and they try to time the market. Unfortunately, if they wait too long, they might be holding product for a good while waiting for the market to come back.
By the same logic, don’t wait too long to get those farmers/ranchers into your dealership for a post-planting or pre-harvest special on parts and service or even that new truck or SUV. Put farmers/ranchers at the top of your prospect list. Oh, by the way – if your dealership is signed up to sell the new AGwagon, you might want to order in a few now – they will surely attract the attention of farmers and ranchers in your area.
