Marketing Strategy in Weather Markets
Traders and analysts agree the weather is what has captured the attention of the grain markets. Weather markets can lead to price spikes and selling opportunities to farmers, but they are usually short lived says Joe Vaclavik on his “Grain Markets and Other Stuff” Podcast.
Vaclavik… “I don't know if I'd call this a crop scare event yet, but it could turn into that. Given the forecasts that are out there. Some are calling for a hundred degree heat for several days. Others are not necessarily that bad. But if we do get into a full blown crop scare event, remember that they're typically short-lived and short-lived could mean a week, it could mean two weeks, it could mean three weeks. It can mean a month. Very rarely do they last longer than that. Timing of course is the tricky thing.”
So what is the best way to approach a potential crop scenario from a grain marketing standpoint?
Vaclavik… “I think you've got to kind of be a scale up seller, meaning that you sell small percentages along the way. Don't put all your eggs in one basket or pin all your eggs to one price. I don't think you can do it that way. I think that the better and maybe more responsible way to do it is to be a scale up seller. You know, every time the market's up, every time we're up 10 cents make a sale or 15 cents, whatever the number is. But I think that you've got to be a scale up seller and just resort yourself to the fact that you're not going to sell all your bushels at the high, you probably won't even sell any of your bushels at the high. So get that idea out of your head.”
A marketing plan is even more important in volatile markets.