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I would like to get some opinions on that from the seasoned corn growers.
Just like any crop, figure your break even, set a profit margin and go!

I've been using hedge to arrive contracts and its been working out great for me, delivered some at $3.86 in January when cash price was around $3.40. Usually can roll the contract to the next month and pick up some money You just have to be sure you have the bushels to cover the contract, guys got caught 15 years or so ago when the market went the wrong way on them.
 

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Because, nobody, for any length of time can master marketing, no matter how long studied nor practised.
But you can do better and a little effort is most often well rewarded. Just shopping samples around or calling a few buyers pays off, and that has nothing to do with timing. Basic knowledge of historical basis levels and some charting can really help but it takes effort. Hardest part is removing the emotion from marketing.:wink:
 

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All true but the overall fact remains, 2/3’s of the crop is sold in the bottom 1/3 of the market.
Then there should be some solid interest in this thread then, because there has already been some pretty good advice given. That's a stat nobody should be happy with and should be priority #1 on any farm IMO.
 

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Discussion Starter #25
All true but the overall fact remains, 2/3’s of the crop is sold in the bottom 1/3 of the market.
I've often heard that, but never seen any actual evidence, it should be quite provable, can anyone direct me to a source that shows that to be true?

Somehow everyone I talk to, and most posters on these type of forums always sell not only in the top third, but usually the very top tick, same with yields, I see the AFSC numbers every year, yet everyone I've ever known or read has average yields substantially better than any of those recorded by AFSC. I must associate with nothing but the very best marketers and growers anywhere, right, that is the only logical explanation isn't it?
 

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Discussion Starter #26
I think the best way to avoid being a bottom 1/3 marketer, is not be in a situation where cashflow dictates marketing decisions ( buying or selling). Easier said than done, I realize, but consider this:
Some marketers refer to the John Deere Low, when payments are due so farmers all have to sell. If payments on late modeled machinery are what puts many operations into a situation where cashflow dictates poor marketing timing, maybe the equipment helped them increase productivity 10% over old payed for equipment(doubtful), but it cost 20% of gross profit due to having to sell at the bottom to make the payment, wouldn't they be better off with poorer productivity and better profit? Completely hypothetical numbers of course, and many operations not only do justify new equipment, but also do it profitably, but I also know there are many for whom it is a viscous cycle.
 

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This should be a good thread . Most talk on the forum is about equipment etc . I personally have been just selling at spot prices and not selling much of anything unless it is in the bin . We ( dad ,myself, and my brother) signed up on cargills market sense program to help understand some of the tools and plays that can be used to market grain . Puts , calls, and focal points are just some of the basic plays . We have learned a lot in the first six months but have by no means mastered anything . I feel it is going to take us a few yrs to really understand this stuff. Yes there is a fee to be on the program but we have easily gained that back already . I think the main reason for us going on the program is that it is hard to focus on this stuff ( ecspeacially if you don’t understand it. Having someone watching this stuff every day while we are farming is a plus . Selling into the future and planning out a farms revenue is going to be more important as time moves on . I don’t want to be left in the back of the pack !
 

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I won't call myself a pro in marketing by any means but something that has always worked for me is forward selling enough to cover my cost of production. Bin space for me tends to be tight as I keep stuff for 2-3 years afterwards to get a price I'm happy with.
If you have a good relationship with your elevator and you forward sell your crop and can't fulfil it for harvest delivery the price is normally lower at harvest and another farmer will love to take your contract price over their cash price. I've only been burnt once in my life and that was with the fusarium scare and my durum.

I'm a small farmer though so I don't have to worry about cash flow as I work full time. But normally I like selling my input costs and sit on the rest until you get the high price you're looking for. Still sitting on some wheat canola and durum. I'll probably pull the trigger on canola if it gets to 12. Wheat I'll sell later in the spring.

I stick to my rotation, pushing rotation doesn't end well for me it seems, but lots of canola going in around my area this year,
 

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Well my marketing plan basically is living large on the line of credit - no sales until that durum is $8 and canola/flax are over $12. That might take until May/June.

Typically I have found those two months to be the highest historical prices. Basically when the old crop is mostly gone and there is uncertainty about the new crop.
 

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And then there are the unforseen, sideswiping market factors, 600T of aging stored green peas really help put that in perspective!
 

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https://www.amazon.ca/Technical-Analysis-Financial-Markets-Comprehensive/dp/0735200661/ref=sr_1_1?ie=UTF8&qid=1521252705&sr=8-1&keywords=technical+analysis+of+the+financial+markets a great start for technical analysis, super deal on it now too. It was the first technical analysis book I purchased and still look back to it sometimes.

https://www.amazon.ca/Trading-Zone-Confidence-Discipline-Attitude/dp/0735201447/ref=sr_1_1?s=books&ie=UTF8&qid=1521252895&sr=1-1&keywords=trading+in+the+zone This one covers the most overlooked but one of the most important parts of this game.

https://www.amazon.ca/Japanese-Candlestick-Charting-Techniques-Contemporary/dp/0735201811/ref=sr_1_1?s=books&ie=UTF8&qid=1521253025&sr=1-1&keywords=candlestick+steve+nison Much more difficult to get through than the others but an important tool to mix off with the others.

https://www.amazon.ca/Market-Wizards-Updated-Interviews-Traders/dp/1118273052/ref=pd_sim_14_7?_encoding=UTF8&psc=1&refRID=P1FWCS6NCMW0F2X0PSBV Much easier read, more entertaining stories but some great lessons in there.

I have a pile of those types of books but those four are probably the best to start with.

Once one has read those books at least once get a free forex trading account to watch the patterns develop and finish. It takes a lot of hours but keeps one out of trouble.
 

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And then there are the unforseen, sideswiping market factors, 600T of aging stored green peas really help put that in perspective!
Here it is folks, avoid this! Afraid to sell into a high-priced market because the farmer doesn't want to pay the taxes and he/she rides it to the bottom. I don't know if that is your scenario Don but I have seen that scenario several times. Speaking with grain buyers it is actually very common. One has to be OK with paying some taxes, especially given the way gov't is managing things I would be surprised if taxes drop anytime soon. Green pea acres set to rise this year so might be a good time to unload those peas.

Another marketing strategy is to use target prices. Often a buyer will reach somewhat for a target that is in place instead of actually changing their basis or posting higher bids. This is where charts can come in handy(if the commodity is traded). Just look at the chart to see where there is areas of upside resistance where the market may top or falter and place your target there. Canola has been an excellent example of this for a couple of years now, goes to the $12(approx) and turns lower. Did briefly go higher last spring though.
 

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Yes what SW says about the canola ......look at the charts . They are a good indicator of when to sell .....history repeats itself .
 

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Had a fair amount of red lentils last year, and ended up selling them all just before Christmas when Viterra had a special on. Glad we did too, because prices have been at or below that special ever since, and I don't see them going up anytime soon, not even into next year[1]. We knew our unit cost of production and so we were satisfied with the price, even though 0.30/# would have been better! Still made money.

Currently we're in pretty good shape after a decent marketing year. Bins are mostly empty, and we have enough to cover the coming growing season. I really don't like carrying much into summer, as bin space is already tight and I get nervous as harvest approaches. In hindsight, we didn't do too badly on the prices. May not have hit the top, but certainly didn't hit the bottom.

In my mind, as long you are making a good profit after paying yourself, you can't ask for much more than that. As my dad says, sometimes a bird in hand is worth two in the bush. I'm always happy to unload my inventory so it's someone else's problem. The risk to storing unpriced grain is hard to quantify. Can't worry too much about theoretical profits you missed out on.

[1] Actually it's probably worse than that. Grain buyer told me the other day that there's still a huge amount of red lentils that have yet to be delivered, and there's virtually no movement on them right now. Apparently a lot of guys are starting to get a bit panicked as we head into the next season. Made me feel doubly good about our decision to sell and deliver it all back in November.
 

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For the guys that use charts what charts do you look at or use? This has been a great topic. Hopefully people will continue to contribute to this thread.
 

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I used to be one of those guys that sold only when it was in the bin, but have been moving more and more to preselling 20-30% before seeding then as crop progresses I will get up to 50-60% of an average yield if the crop is coming along well. The decision of what price to sell at is based on the cost per bushel I have for each crop on an average year and achieving a price better than that plus I only like to sell into the rallies as they seem to come along often enough. I personally find that forward contracting canola off the combine can work quite well if you can get a decent price, because there is usually no quality factor to affect grading, it provides extra bin space, cash flow, and it is often one of the riskier crops for storage. Crops like cwrs wheat I like to contract for later in the year usually Oct Nov time frame because if there are any quality concerns it seems to take the elevators a month or two to get a handle on things and right off the combine they seem to grade a little tougher or pay a little less for protein etc.

As for holding crop for a year or two, I try not to do that in general but I am prepared to do that with my red lentils, at the low price right now they are/were last time I looked they were in the bottom 20 or 30% of their price range. In a case like this I will hold until the price at least hits the midway point of price or I am forced to sell by some really bad circumstances. I cannot afford to do this with all my crops but anytime I see prices this low even if there is a solid reason like tariffs with no reprieve in sight, I like to hold because I would rather sell other crops with a reasonable price for cash flow, and if feel eventually the prices of the low commodity will come back to a more reasonable level.

I used to use the futures market for hedging but did not find that it worked real well, If the market moves against you the margin calls can be costly, and even though you don't lose the cash you still need to come up with it until you sell the physical product and close the contract, plus you still need to deal with basis levels, and in the case of something like hard red spring wheat on Minneapolis you need to deal with currency issues as well. So I found it just as easy to deal with forward cash contracts with buyers instead. I also have dealt with options and still do. I have seen the comment above that 70% of options expire worthless and the sellers are the only ones that make money, while that may be generally true, I see it as insurance, most people here carry insurance on their house, equipment etc. Insurance companies are the only ones that make money in that case as well but the fact is if something goes bad you are covered and are not in a dire financial situation. I see puts as a similar insurance, if I feel there is still upside to a market but I am not sure and I am happy with the current price a put can work very well in giving me the insurance on the downside but still giving me the upside that I kind of think might be there. ( I could wait for the upside and just do it in cash market, but I could be wrong and then lose the profit that I could currently price in so I will use a put in that situation).

Marketing is a big part of farming it is just that it is tough to do and all of the market consultants giving advice out there would be multi-millionaires if they were right because they could just play the market vs collecting a small fee from each of us. Every farm is different from cash flow needs/timing to storage availability, to risk. The sad part is even given that I know what my average cost per bushel is and even given that I have my inputs prebought and know what my costs per acre will be, the fact is that my cost per bushel varies dramatically given yield, and if the rain doesn't come my cost per bushel could be double or triple my average. so in typing all of this I just gave myself a headache trying to decide what to do next.
 

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Somehow everyone I talk to, and most posters on these type of forums always sell not only in the top third, but usually the very top tick, same with yields
Well... There was one time I was actually in the top tick on both, and I loved every minute of it.

Drought 2012. Everyone was burning up. Except for this small sliver of which I was in. July/August I got 17 inches of rain where I live and 95% of my crop acres are, 3 miles away less than 2 inches. Corn and beans through the roof, I dumped all corn averaged 245 BPA for an average of $7.90, beans average 70 BPA and around $16.75.

Now of course I'd like to point towards my exceptional farming and marketing skills but we all know its just dumb luck there.

A few things I've picked up to help marketing which generally work:

1. Never sell in the last half of the month.

2. Never sell on Friday.

3. Put in offers, markets move 24 hours a day, a lot get filled over night.

4. Never sell in a short week.

5. Around Columbus Day is generally the low, buy then.

6. Don't listen to a guy on the internet...

Naturally these aren't full proof, but seem to yield the best results for me...
 

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The purpose of selling futures (hedging) is to establish a fixed price for yourself for a specific future delivery date. Margin calls shouldn't be a problem[1] because if the market moves up, that means the price your grain gets has also moved up, covering your margin call and making up the difference when you buy back the futures. When hedging the market never really moves against you, because your goal is to set the price in advance, according to your own criteria. Basis is still a risk, but that can be managed using basis contracts. If a person sells futures without any sort of delivery contract, that's definitely speculation. Keeping grain in the bin unpriced for a year or two hoping for a rebound to some price point is also speculation. Might be based on many years of good experience, but it's still speculation.

Having said all that, we don't sell futures ourselves. We just use deferred delivery contracts to lock in a price at the elevators. Of course behind the scenes the grain elevator sells futures to hedge their position with our grain the moment you sign the contract.

Before Lee Melville out of Brooks retired, he offered week-long futures marketing courses for farmers, which were really interesting. He had also developed a futures simulation that was quite interesting. In the group I was with, the women participants handily beat the mean. I think most of us were either too aggressive or
too passive in our marketing.

[1] Quick edit here. Any good banker that understands farming and marketing should readily grant you a short-term, revolving line of credit to cover margin calls before the grain is actually sold. He will know the difference between hedging and speculating, and know that hedging will means his loan is guaranteed to be paid back.
 

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Great thread with some great advice.
Here is a few things I've stuck to over the years that has helped me:

1) The biggest marketing factor for me is knowing my cost of production. This is and will always be the single most valuable piece of information for me when making marketing decisions. If you can't tell me your cost of production $/bu and/or $/mt then you have no idea what your margins are. I use a spreadsheet that is updated frequently with costs and projections. I try to make as many crop input purchases ahead of the next crop so that I can solidify my cost of production early. This way there are less factors that can affect my margin.

2) As a farmer I am in the business of SELLING my grain...........not STORING it. Having said that I will store grain if I can't make my desired margin. I have done the calculations many times on what the difference would be paying off a loan/crop input loan/equipment loan etc. and the interest I keep paying has always been more or the same as what I gained in storing the crop. It is a much better option in my opinion to store money in the bank as it is to store grain in a bin. I have enough bins for my entire crop plus a bit. Buying bins JUST to enable me to store a previous years crop hasn't worked for me but having said that there have been a few instances where it may have made sence.

3) Marketing information is another key piece of marketing. I use a couple marketing companies that I pay a yearly fee. Most if not all of these companies do a great job of collecting information and putting it in a reports that are concise. This way I don't need to spend 4 hours a day doing it myself fumbling through all the info. All of the reporting companies give suggestions and recomendations that I do look at but I don't use those as my plan, rather it is nice to compare with my own decisions to see if someone else agrees with them.

4) Charting - I am by no means a master of charting but charts do tell a lot of information that you can't get from any report. I like to look at the seasonal trends and also compare that days future value to that of the last 5 or 10 years. When a chart shows that the futures are in the top 5% of what they have ever been in the last 5 or 10 years, its a pretty good indicator to sell. I've attached a chart of Nov 2018 canola futures from today as an example. One is the last 6 months and one is the last 5 years. Each chart tells you something different.
Barchart.com has a lot of useful info with futures, options, and charting.

5) Forward contracting - Most years I am 25% sold before seeding and 50-75% sold by the time harvest hits. Malt barley is a big one for me. It seems in my area that if you didn't forward price by the time harvest rolls around the price is terrible and/or there isn't any room for delivery until way into the new year. Of course it all depends on the info above throughout the year.

This is just a few things I stick by that seems to work for me. Everyone is different.

Lots of great info on this thread, thanks to the OP for starting
 

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Only one poster mentioned this and it is the most important and the foundation of a marketing plan, KNOW YOUR COST OF PRODUCTION. If you don't know that how do you know when to sell? So from now on take everything I write with the same value you paid for it because I am no means a marketing guru. I like everybody else believes there will be more canola going in the ground next year, myself I will be growing 15% more acres. From now on these are real numbers from my COP, I know that at 40bu/ac to cover my fixed and variable costs I need $9.03. So here is what my canola marketing plan looks like so far. I have sold 25% of my production based on my SCIC numbers,starting with deliveries in Oct and ending in Jan at an average of $11.02/bu which is $1.99 above my COP. The last few days we have seen the canola futures rally based solely on what I believe is a weakening CND, the South American crop yield is pretty much determined by now and not much weather scare here in North America. So I would like to take advantage of these higher futures but I am to chickenshit to price any more of my production as then I am locked in to delivering that product that I don't have seeded yet. This is where a put option would work, right now to buy a $520.00/T Jan. canola put, to cover another 25% of my production, would cost me $20.50/T or $.47/bu leaving me with a floor price of $11.32 but this has no production risk at all. So if canola futures next Jan. are higher than $520.00/T I will let my Put option expire, which will cost me $.47/bu and sell my physical canola. However if the canola futures are lower than $520.00/T I would exercise my Put and lock in that floor price of $11.32,( $520/T-$20.50/T cost of the Put), historically in this time frame crushers have basis anywhere from $15-25/T, so I would deliver and realize $474.50/T or $10.76/bu,($520-$20.50-$25=$474.50). So although this is $.27/bu less than what I had contracted the first 25% for I still am $1.73/bu over my breakeven price. I know that is a lot of numbers to digest and it is probably clear as mud but I am afraid that with increased acres and an average or slightly above average canola crop 2019 canola futures won't look so good, but that again depends on what the CND does.
 
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