Grain marketing is not easy.
In fact, most farmers I talk to say that it’s the thing they enjoy least about farming.
At the core of it, grain marketing is basically managing a bunch of assets.
Whether it’s shares in Microsoft or bushels of corn, these things have a monetary value which can go up or down.
Are you a Gambler or a Risk Manager?
Earlier this year, I wrote a three-piece blog post on how your farm is like a hedge fund but it’s often managed like you’re at a craps table at the casino.
I said it then and I’ll say it again now: What really matters to a risk manager is what return on investment (ROI) they’re earning.
To earn a positive return, a hedge fund manager will be cognizant of things including (but not limited to),
1. The purchase price of an asset,
2. Negative factors affecting the asset, and
3. Positive factors affecting the asset.
For you, the farmer, this can easily be defined as,
1. Cost of production of grain,
2. Bearish factors affecting the price of the grain, and
3. Bullish factors affecting the price of the grain.
If you know your break-even, the only thing that I think you should be thinking about is weighing the likelihood that the price of your unsold grain could go up versus the likelihood that the price could go down.
This can easily be understood by breaking down what the bearish and bullish factors are.
When you do this, it’s sooooo much easier to understand why you should be holding out for a better price or selling.
Clearing the Noise
One of my favorite movies of all time is “For Love of the Game”. It stars Kevin Costner, who plays aging baseball pitcher, Billy Chapel, who’s is doubting whether or not he should continue playing in the Majors anymore.
Now, I have a bit of a bias because I was a professional hockey player for a few years. And when it came time to hang up the skates and start FarmLead, it wasn’t an easy decision!
Sidenote: Hindsight is 20/20 as it’s been a great decision! We’re at 35 people and we’ve helped 1,000s of farmers make millions of dollars more for their grain!
But the takeaway from Costner’s performance was one scene where he’s being heckled profusely by New York Yankees fans in Yankee stadium. I’ve been yelled and sworn at lots in my professional hockey career so, again, I can relate to the scene.
Instead of giving into the noise all around him though, Billy Chapel, hunches over, focuses in on the batter 60 feet away, and says three words to himself:
Clear the mechanism.
All the sudden, everything around Chapel goes quiet and the only thing that matters is the catcher, the batter, and the strike zone.
Put another way, he ignored the noise and tuned his mind into what really mattered.
93% Grain Markets Accuracy
It’s great to grow 200-bushel corn or 100-bushel wheat. But what matters to your success going forward is your ability to sell that grain at a profit.
Over the past few years, I’ve been writing the FarmLead Breakfast Brief. It’s a free, daily analysis that is read by literally tens of thousands of people around the world who have some skin in the grain markets. Every morning by about 830AM EST, I’ll look at what’s going on in corn, oilseeds, cereals, and pulse markets.
My skin in the game is thinking about grain markets from the perspective of how my family in Saskatchewan and North Dakota should be doing their grain marketing.
I focus on the bullish and bearish factors and the strength of each, while “clearing the noise”.
Over the past two years, in the Breakfast Brief, I’ve made 130 calls to make a cash grain sale, hedge with a basis or futures play, or hold grain for a better price in the future.
If I said to hold and the cash price went up in the following 30 – 60 days, then most people would say that was the right call.
If I said to sell grain and the cash price went down in the following 30-60 days, then most people would also say that I made the right call.
Out of those 130 calls since January 2016, 121 have been correct.
That’s 93% accuracy. (If only I had that sort of accuracy in my hockey career!)
You can see all my grain market calls here for yourself – after all, they are timestamped on the FarmLead site and emailed out every weekday morning to tens of thousands of readers.
Today, we’re taking the Breakfast Brief to the next level.
I’m proud to announce GrainCents, the first fully transparent tool that makes it easy for the farmer to make sense of what’s affecting their grain’s price and when they should sell.
GrainCents is an annual subscription of my grain marketing recommendations for when you should be selling cash grains, doing some hedging, or holding for a better cash price.
It also educates the farmer on what we view as bullish factors, bearish factors, and what’s just noise.
What sets GrainCents apart is that it is available on a crop-by-crop basis. This way you ’re not paying for information that doesn’t matter to you. This aligns with our focus to “clear the noise”.
Crops start at $250 per year. That’s it. Literally, cents per acre when you add it to your cost of production. See the annual cost per crop and combo plans on GrainCents here.
Combined with the FarmLead Marketplace, GrainTests.com, and the recently-launched Price Discovery tool, GrainCents is another step ahead as the leader in making the farmer more confident in selling their grain and doing so for the best possible price.
Head over to GrainCents today and partner with FarmLead to make more sense of the markets affecting your grain.