How about a thread about marketing?
Just reading the thread about politics and the complaints about a lack of productive threads lately, marketing particularly. It is too bad marketing gets so little attention on the combine forum, since there are so many extremely wise ( and civil) posters on here. NAT has lots of marketing threads, but very little that is directly relevant to western Canadian crops, Agriville has a few very good marketing posters, but most threads just denigrate into politics and name calling.
I'll start, by describing my unscientific marketing for this year.
I'm in the grow it bin it sell it camp, due to the high risk area I farm in, I don't presell, even when I've been certain that it was the right thing to do. I'm willing and often able to store for more than a year if necessary, last fall, I was confident enough to decide it was worth the cost of financing to keep storing. For example, I've just started selling my 2017 barley, along with most of my 2016 barley, and the remains of the 2015 barley(kept some due to the extreme dry conditions in case it was needed as cow feed). My patience has been well rewarded, now getting a full dollar better than the best price available during the brief weather scare last summer. Scale up selling has been working, and believe that as corn increases in value, feed barley and wheat here will still have some more room to move. This move at this time took me by surprise, but have thought it was inevitable eventually due to the large disincentive buyers have been offering to grow feed barley for so many recent years.
Canola, I quit selling after the weather scare last summer, during which I didn't get nearly enough sold. I traveled extensively last summer and fall and was convinced that the canola crop was far less than advertised, apparently I was wrong. It's taken this long just to get back to where I quit selling last summer, and am scaling up selling at values above this. From these higher levels, any weather scare in Western Canada could get us to the $13 level in a hurry. Crush margin is improving, and could continue to now that Argentina is past the point of no return. Storing canola really needs to pay a premium since it usually requires more work to keep in condition, which is why I'm reluctant to sell much at these levels yet. But I think that is why prices have such a solid ceiling all winter, everyone just wants it out of their bins at any price, and buyers are happy to accommodate.
I only grow CPS wheat, I did sell a lot of my 2016 production on the run up last summer, not quite the peak unfortunately. Have been scale up selling CPS lately, but think it has much more upside potential than barley, they are virtually even price per tonne right now, barley might even by slightly ahead. The winter wheat story in the US isn't over yet, and regardless of stocks, should continue to impact prices, dragging even CPS with them. What everybody knows isn't worth knowing, so I may be way off.
Unfortunately, I don't actively market my cattle, since they don't store so well, just try to pick the top of the period between new year and end of March. So don't have much to offer there.
I've been wrong on fuel purchases since fall, and continue hand to mouth waiting for an opportunity that just doesn't come.
The markets have been lack luster. I am wondering if canola will get to $12 or higher. Lentils have been a dog. Even though the futures have gone up a lot on soybeans the locals still want to buy them at $10.50 when the futures were up to $10.75 US. We have not sold any flax and am hoping it will get to $13 or higher. I am curious if a lot of farms have a lot of grain on hand or if a lot of guys have moved most of their grain.
So far our best marketing strategy has been to avoid going into an elevator! We don't really have a strict strategy that we follow. We seldom presell either as am in a higher risk area also, frost the biggest one. Have seen many guys take a bath on a contract they couldn't fulfill, my pockets just aren't deep enough to handle something like that. Mostly grow barley, canola, and oats, but will throw some wheat into the mix next year, even though we never seem to do too well on it.
Sell canola right off the combine or as soon as we can after harvest. Just don't like the risk in storing it, always figure if a bin spoils, you lost any gains you would have made by storing it, for probably two crops. We are usually short on storage so that plays a factor also, and use the cash to take care of some bills and reduce the interest we would be paying if we held on to it, sometimes interest is overlooked and can quickly eat up your profits.
Barley is our big crop. Market it directly to hog barns and feed mills, easily pick up a buck or more some years over elevator prices. Sell some before winter if we have some piled on the ground, but then hold on for better prices. Spring and summer usually sees a rise in price. Hauling it ourselves helps a lot as we can deliver on short notice, and the buyer won't try to Jew you down when he sees you face to face, as opposed to a trucking company delivering a load then having them call you and want it cheaper because it wasn't what they wanted, something like the Maltsters do!
Oats used to be a good crop, until Richardson took over the majority of the Milling in Canada. Can Oats at Portage was great to deal with and always had a good premium over anywhere else, but now they won't even pay the freight over the elevator price to deliver to Portage. Looking to get moving it south, and see how that goes. Not even sure if we will grow any this year.
Seems any time we grow wheat, the crop sucks and we hardly have enough to bother with trying to shop around, so just sell whenever.
I imagine most guys have a better marketing plan than we do, but it seems to work alright, for the most part.
Dad does the marketing here as it gives him something to do. I spur him when i think it is time to move something. We go for malt barley and will contract a bit if price looks good, if not we grow anyway and bin and see what happens. If it goes malt later in the year when it was previously called feed then there is not much debating on how to market. If it is feed and price is low it sits in the bin.
Peas are sold when we think the price looks ok. Still have last years crop in the bin. They will keep another year but if price moves up during summer like usual then trucks will be loaded.
Flax is ready to go but elevator not taking delivery right now.
Yellow mustard we were waiting for 43 cents/lb this winter but never got there so will see what happens. Will likely sell a third this spring to get some movement.
All in all, small farmers without a lot of debt to service so it is more of a gut feel approach. If we are wrong we keep crop another year and see what happens. Bins can be paid off quite a bit if grain moves up $2/bu in a year vs taking the price at harvest.
Not much of value to add to the subject so dont post comments on the topic. Plus i haven't been able to accurately identify any trends. Someday i will need to delve into it more and see if i can find something to correct that.
depends on how much late season production risk as far as forward marketing which crops.... Canola, peas, mustard, winter (feed) wheat I am not scared to have up to 30%of average forward priced before harvest if that looks like the thing to do.
Lentils and durum can bite you pretty hard if you have contracts on the books and crop comes off in low grade condition. will do a bit of durum in early august to make sure I have some fall delivery slots.
Price is always important but no one has the ability to stare into the future and tell what the best price of the year will be. I judge my sales based on how well I did over a 3 month period not 18...... If I can sell at a profit and have cash flow lined up to cover expenses I am sometimes way better off than holding, hoping and handing over interest! Several times I have actually unknowingly topped the market by forcing myself to incrementally sell into rallies.
I keep a spreadsheet that starts the year out with average yields and average expenses. as the year goes along a account for the actual expenses spent of the crop and then after harvest the actual yield. gives a much better picture of break even pricing as the year progresses.
There's some thought China might retaliate to the steel tariff's by hitting the grain's. If that materializes there'll be a pretty significant correction.
Need another example of politics effecting farming?
We were about 80% forward contracted last year. Yeah they clang when I walk......or is that the marbles in my head...:22:
I know its hard but i avoid anything thats on a usda report, except for cattle and sheep. Last cereal i grew i marketed direct and got 40% above market price. I now sell everything direct to end user.
I do over 100K of sales through facebook groups.
Bulk commodities on the usda report is a joke, epsecially when we get the free trade marlet is the way to go and india shove tariffs on....
There will be alot of correcting to do in what people grow and the amount to match the changing market place - free trade is good...but we dont operate under free trade...we are told we do but we don't, far from it...and hence the issues.
Fair trade is more plausible but that will no operate like free trade...inter country agreements will be common...like Trump is doing - rebalancing with each country...China may impose counter tariffs to steel..So the russian weheat etc goes to china as they best buds atm...not a bad thing because then the current buyers of balck sea wheat got to go elsewhere...so will work itself out.
What we need is for the people who cant afford good food to be able to afford it, they are growing in population but not consuming...so these one line wonders who say we need to double food production by 2050?? well no...not really as the expansion in population is not linear to consumption.
Good thread jvw!:smile:
I use forward selling in cases where I can lock in substantial profit and risks are low. One way to lower that risk is to have inputs pre-bought for the up-coming crop so you know your production costs. Around here one elevator is pushing futures-first contracts and that worked for a couple of years(on wheat in particular), but lately they don't seem to get to agressive on basis...I guess they have you so what can you do? I felt from the start this may have been a trap, just took them a couple years to set the trap! So for this reason(and others) I am looking at getting a hedge account going again and doing my own risk management that keeps me open on who I can haul to. Something we used to do but it takes time and capital to manage. Might be worth it again.
As far as specific crops go all my canola goes to Bunge. They have been great and the better dockage and delivery scheduling pays for my 4 hour round-trip haul. Last couple years I just sell when the price hits $12.
Oats: Sell to a processor that is good to work with and doesn't restrict what I can spray on the crop. Grew lots last year, less this coming year(better options).
Wheat: Always been a good money-maker here, often just as good as canola. Wheat responds well to high management. Often a good plan to seperate basis from pricing the actual futures as they never seem to both be good. Patience is key and pull the trigger when you see an opportunity. Take good samples and build trust with your buyer. There have been a few times when I basically sold the entire years production at once.
Peas: Second year grower here. No contract this year and my typical buyer does not seem interested. Could have $7 now but it is the best looking stuff you could imagine and grown from registered seed, so I am in waiting mode. Might put some back in the dirt as seed...
Soybeans: All seed production. Marketing is complicated there and differs by the company you grow for. Usually a good premium but comes with a bunch of extra work/cost.
Corn: Here is where it gets interesting! The corn market is mostly a cash market around here. I think that makes it a bin-it-store-it-sell-it crop. Obviously there is an elevated production risk on this crop but I feel there is a pretty large up-side on this crop, more than other cereals. As such, I am weighing whether to cut acres on wheat and grow more corn. Spending the money on the drying system to make this possible and a huge feed-mill going up locally which is great. So last I checked it cost about 28 cents to guarantee a $4.10 US december corn price, there is carry in the market right now although that is eroding. My gut tells me a guy should be watching to make a play on that as well as lock in the poor Canadian dollar and grow corn. I would like to get some opinions on that from the seasoned corn growers.
Like I mentioned currency is something that affects us in Canada a lot and I try to buy equipment from US when we have a good dollar(bought new semi trucks last time CDN dollar was above par). Wish I could lock in fuel prices at least a year ahead but bought big storage tanks to partly manage that, which has paid off easily in last few years.
Big thing is managing cycles, the markets are cyclical and more-so all the time. Don't think you missed the boat and make forced sales into a down market. Also don't get caught having to make a sale, best to work ahead if you know you have to make a sale(for whatever reason). Last minute things can go either way and judgement gets cloudy.
Good thread. I don't believe in pre-selling unless I can get a good contract with an Act of God, just too much weather risk here. I am still sitting on all my 2017 spring wheat, and a little winter wheat, all hard red in this area. I just don't understand the lack of export demand for wheat at these levels, especially given how much corn is moving, the weather issues in South America, and the issues in the central plains. I don't think enough of a premium is built into the current pricing given the risk to crops this year. I also am not convinced that spring wheat plantings will be as high in Montana, North Dakota, and South Dakota as USDA is projecting, but I could be wrong on that as well. Do many of you use options with your sales to help keep upside open? I have been looking at it some, but between my lack of knowledge and confidence in the process, and the cost of exercising options, I am not sure anyone makes money other than the people who sell the options.
Tariffs on US origin grains may be a positive for Canada, if we have the capacity to ship the grain, there should be additional business to pick up.
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