The Basic Elements of a Successful Grain Marketing Plan

As a producer, you know the value of being prepared. You know the importance of monitoring your circumstances and knowing that sometimes, timing can be everything. And that mentality doesn’t just apply to harvest. In an ever-changing crop market, it’s important for producers to set themselves up for success with a grain marketing plan. This article will not only talk about how to start your plan, but also, the importance of one. It’s easier than a lot of producers think, and can be made even more impactful with the assistance of an expert.

There’s not one single way to market your grain, but we’re here to give you what all smart grain marketing plans include. Every farm is different and every producer is different. Understanding the following factors will assist you in determining and managing your farm’s total business risk and the unique opportunities you have. This will also give you a better idea of the value in type of crops grown, different marketing strategies available, when to establish price targets and how to determine profitability.

Let’s take a look at what makes up a sound grain marketing plan.



1. Crop Production Plan
Develop a crop production plan that is well suited to your rotation that maximizes potential.

A crop production plan, developed before the season starts, helps growers calculate how much of each crop to plant and their profit margins. Having a plan like this can significantly reduce the stress and chaos of a production season, and can contribute to the profitability and productivity of your far.

First, examine all the crops that could be considered in your production plan. When doing so, consider all the important agronomic factors including crop rotations, herbicides, equipment requirements, and management needs for the farm.

Determine what crop in your field will be the most profitable. Calculating your cost per unit identifies the most profitable crop to grow in your plan. This allows you to better understand the price you will need to define your cash obligations and cost hurdles over the crop year.

Producers may use Business Risk Management (BRM) systems to help them manage the risks of income declines caused by factors like drought, floods, low prices, and higher production costs. The services complement each other by offering insurance against various forms of losses as well as cash flow options. These systems help decrease stress and keep you prepared no matter what.



2. Market Analysis
Gather unbiased market information from credible sources to make good grain marketing decisions. Monitor market conditions to make a sale when pricing is strong.

A variety of information sources should be used when deciding your selling price. Keeping in touch with unbiased local investors, cash grain traders, commodity futures brokers, and market analysts on a regular basis can help round out your opinion and help you make informed selling decisions. Participating in a marketing club is also a fantastic way to broaden your knowledge and expand your information sources.

Again, every producer’s concept of valuable market information differs. Some producers may want precise pricing advice, whereas others would rather have general market data to use in their own marketing strategy.
No matter where you prefer to get your data from, you should always get an unvested opinion, free of any bias from a broker, dealer, or grain business with an interest in convincing you to sell your grain or exchange a product. This is a surefire way to know you’re selling your grain at the right time for the right price.



3. Financial Position
Understanding where you stand in an ever-changing market

Now it’s time to determine pricing for your grain. Start by estimating the cost of production for each crop. This reveals your break-even price for your commodity. The break-even price can be calculated by dividing total cost attributed to that crop by expected return. Your strategy should always be geared to selling above the break-even level.

Let your break-even price guide you. But also let it keep you disciplined. It’s good to have a target price in mind so you’re not holding out for the market price to climb higher and higher. Play it safe and set yourself up for that nice, secure target profit... Read More