Simplifying Your Commodity Marketing
Grain marketing isn’t easy, but it doesn’t have to be complicated. This according to Standard Grain’s Joe Vaclavik on his “Grain Markets and Other Stuff” podcast.
Joe is referring to the complex marketing instruments that many companies are out there pitching to producers.
Vaclavik… “I could talk about this in regard to a lot of these different types of contracts that are floating around out there that maybe your grain buyer will pitch to you. Accumulator contracts, premium pricing contracts, average pricing contracts. I think there is a good segment of the farming population when it, when it comes to grain marketing, you may need to get back to basics a little bit and really improve those very, very basic fundamentals. It's not easy to sell the top, or even the higher a quarter or third of of grain prices available to you throughout a calendar year, throughout a marketing year. That's not easy to do, but I don't think that throwing a whole bunch of additional tools into the mix is going to make it any easier. In fact, I think it's going to make it harder. I think it's going to make it more complicated.”
Vaclavik says getting back to basics includes selling some cash grain or locking in hedge to arrive contracts when there are occasional rallies in the markets and making sure you fully understand a product before using it.
Basis contracts may be an option as well, although Vaclavik says he has seen producers fare better on average with locking in futures.