Market Plans/Strategies for the Coming Year

[charliep]

Lee, myself and the other members of our team have been discussing market strategies for the coming year.

How are you planning on approaching marketing in the coming year? What are you crop budgets telling you? Are you doing some new crop forward pricing? Minimum price contracts? How are you handling yield uncertainty given poor subsoil? Crop insurance? Higher costs (read fuel and fertilizer)?

My analogy is comparing to curling. Your lead has already thrown one set of rocks (I'll let you tell me whether you have the hammer). In a market sense, there have already been excellent new crop pricing opportunities (easy to say in hindsight). Did you pocket them? What is your next call going to be? Are you on alert to do more pricing with a target in mind? Is your plan to stay unpriced into the summer?

[rain]

Grain/Oilseed % Sold Price/Delivered Date/Contracted
Feed Barley 10-15% $158.00 January 29, 2003
Canola 10-15% 0 Basis Nov February 20, 2003
Feed Wheat 10-15% $167.00 February 19, 2003

Charlie we are 10% sold October Western Barley futures $148.00.

We used average yields for the last 3 years for the % in order to be safe.

[melvill]

rain, you're a brave soul and hooray for you. In my presentations around the country, usually aggressive pre-seeding pricers/committers are saying this year that they aren't going to price or commit anything "'till she's in the bin" after last year's problems. (One guy told me he's not going to price/commit any 'till it's in the bin 'cause, you never know, the tailgate of the truck could come open on the drive from the combine to the bin!)

Unfortunately, prices may eaily be a bigger risk for those managers than production risk will be. However, it's all a matter of perception, isn't it?

[melvill]

One thing I forgot was another observation in my conversations with producers. The ones who's assessment of production risk being more of a threat than price or market risk are mostly the ones who, when I ask them, tell me that the only detailed market information they get comes from the farm press not from dedicated market info sources!!!

[rain]

I talked to producers north and east of me and advised them not to pre sell do to dry conditions.

[dnach]

mevill, you don't farm do ya?
Your last statement should not be so wide sweeping. In our area there is alot of good markters involved in marketing clubs, our on there own. Some pricing oppertunites have been taken, you would be a fool not to have done it. BUT When you are spending $100 to $150/ac on inputs, and get nothing in return over crop insurance because you had no crop at all, it does not matter how you market, 0 divided by 0 is still 0!!!
We have done certain things to gaurentee a price for Canola, Lentils and Mustard, all with an 'act of God'.
I say this again , we have very little soil moisture and little snow. Yes we should have locked in prices for everything in December, but as it looks we may not get a crop again.
Your statements make some feel dumb about not prcing and locking in and doing this or that but remember, until you walk a mile in shoes with no soles, don't brag about your nike's.

[melvill]

Oh, dnach, sorry to get your hackles up. I certainly wasn't intending to slight anyone. However, dnach, what was it I said that rankled you?

My job as a moderator is to encourage discussion and try to answer any questions I can. A little controversy always encourages discussion and debate. Discussion and debate are where everyone learns something.

The observation about market info is just that, an observation. Over the last three or four years when clients, especially ones I don't know much about, phone me asking marketing advise I make a point of asking what kind of market info they receive. Over that time I have learned that there is a fairly high correlation between the amount of dedicated market info producers get and the type of questions people ask me. Those that ask me fairly detailed questions about market strategies tend to get and use a fair amount of market info. Mostly they pay for it.

I have also learned that the less market info they get, the more likely it is that the producer will operate only in the cash market - no contracting of any kind - just trying to aim for highs in the market.

Interestingly, the other day a producer from near Edmonton phoned me wanting to know if he should lock in his 2003 CPS red wheat for around $4.45/bus. He wanted to lock in 75% of his 3-year average yield. I hope I was able to talk him down to 50%!!

And, yes, I do farm in a small way. And, no, I don't wear nikes. They're way too trendy and expensive. Now, Tony Lamas or Justins are a different story.

[boone]

Melvill, I don't think you should be at all contrite here, you all do a fine job as moderators. When your done you may be canonized. Keep us thinking these things through.

[rain]

dnach I think you have done the right thing by doing little or nothing as far as pre selling and working with "act of god" clauses.

But the guys sitting on last years 17-19% moisture feed barley, in areas with excellent subsoil who have done nothing on last and this years grains have know reason to have done nothing.

There risk is much less then yours but there is always risk.

[dnach]

Good points mellvile.
My intent was just to defend why some good farmers and marketing managers were and still are very 'timid' about making marketing decisions this year.
For those who are comfortable about this years growing coditions I feel you advice is very good. Any ideas on how to market grain with less risk and cost are always welcomed.

[melvill]

Thanks rain and dnach. I actually lost some sleep last night wondering what I'd done.

Then this morning I couldn't find my 29-year-old son's old nikes. Good thing. Their cost would have just made me mad! <grin>

[melvill]

One more thing. This morning I'm off to Rolling Hills to present a feedgrain outlook and strategies presentation. I'm going to ask those attending to tell me, with a show of hands, what they're thinking about their barley seeding intentions and marketing strategies. It'll be interesting. Any guesses as to what their strategies will be?

[boone]

melvill; I have never had a spring that has brought me less excitement. Someone once told me Strawberries are disliked by grasshoppers. Anyone want to join me a couple thousand acre u-pic
operation.