Proof mathematically that marketing works

[blackpowder]

Without proof.
Grain companys do it. Any expense is paid for in your basis.
Removal of all risk would be as simple as selling a little every day. Without brokers expense.
The proof of wich u seek young skywalker does not exist.
No farmers pure hedge nor average out.
All other scenarios hinge on individual timing of decisions.
Im of the belief that any "risk management" by definition would have a cost.
A blending of all the tools available using each for a specific purpose would be my utopia.

[Hopperbin]

Black said. Im of the belief that any "risk management" by definition would have a cost. Exactly hail in, puts calls, have a cost in the case your going to freek out in case price increases or drops after you sell. That same marketing class taught you to use free tools. Cannot put dollar value on it but am sure you paid for your one week class.

[tweety]

Just saying it does, does that make it?

[Hopalong]

Much the same could be said about investing.
No such thing as free lunch, the harder we work at it ourselves, the better chance of success.
Paying others to do things for us will have a cost, you could be right that it will be more than any extra return.
Everyone likely to have somewhat different result.

[tweety]

Given the emphasis placed on "good marketing" i would have thought the answer would be more obvious.

[wakopa]

Guess I better stay out of this one about marketing, lol , I find it usually very easy and why would I hire someone to do it for me , it's fun now .

[charliep]

tweety,

I am going to set up a scenario for you. A young farmer has major payments to make in the fall. They plan to make these payments with canola sales. Crop is okay but needs rain. At this point they are not prepared to sign a DDC because of the production risk. They obviously would like a higher price but they are willing to live with something close to $11/bu. They don't want their price to slip below $10/bu.

In your opinion, would they wrong in buying puts as price protection? Likely to cost something in the order of 50 cents/bu to get a close to an at the money put. We are talking about an individual manager decision in their business - not a decision for all farmers. To highlight we are talking about risk manager - giving up some gain to protect against pain.

[tweety]

Absolutely not wrong. I'm not sure why it took 30 posts before someone mentioned a put option. Thx Charliep.

Protects his bottom price less premium, expires worthless if, like potentially this year, it goes to 20$ and then does a DDC or cash sale. If canola goes to 5 because SF3 floods the market with incredible yields, he gets 10 something.

Any other sure win risk strategies?

[btjadenlepp]

There are two separate decisions:
1. sell today or wait
2. have I sold enough to deal with my storage/cash flow needs

At FarmLink we make each decision in isolation of the other. Marketing Advisors keep on top of No. 2 for their clients, while the Analytical Team calls the markets.

I have tracked the math back over the years as we've grown our business. Sales recommendations (again, different than sales being made for farm management reasons) have netted out in the top third of the range of cash prices for the crop year. That's measured as the net weighted average result of 4-5, 20%-ish sales made over the course of an 18-month window.

www.farmlinksolutions.ca

[tweety]

Do those recommendation come from the knowledge of eating breathing and sleeping what is going on with markets locally and worldwide - something a farmer would extremely rarely take the time to do?

[cottonpicken]

Or sign the contract and cover through calls and take the mathematical beating of 70-80 percent of options trades beinging losers

[tweety]

is it possible for all farmers to sell all grain in the top third of yearly average price?