Common Marketing Errors
Here ‘s an educational segment for grain growers. We are all human and we all have to battle our natural emotions as a marketer.
Common Marketing Errors Made By Producers: Here are some common marketing errors made by growers when dealing with breakevens and setting price targets.
Marketing Error #1 “I want the highest price possible.” An admirable goal, but highly unachievable. When the buyer hears this from a grower, the old antenna goes straight up. This statement suggests several things to a buyer. 1. The grower does not have a marketing plan. 2. It also signals that this grower will only price into a falling market. 3. The price will never be good enough unless cashflow concerns or pure old panic opens the bin door.
Marketing Error #2 “My neighbor received $20bu for their flax last year. Now I want $20/bu for my flax this year.” This is a common marketing error. Insisting on holding out for a past hot bid may be a recipe for disaster. Remember, commodity markets drop much quicker than they climb. Should the market slide to a lower trading range, it’s time to re-visit your target prices. And remember, your breakeven is always different from your neighbors anyway. If you know your breakeven, pricing goals should always make sense to you. It doesn’t matter what your neighbor receives. Be able to respect changes in cash market through the crop year. Changes in world events and weather do change can change the cash bid trading range.
Marketing Error #3 “My salary is just what’s left over” Not a good plan. Always include a wage in your cost of production. Grain and oilseed markets generally always show a profit to growers through the course of a crop year. Addressing your income target right into your cost of production just makes good management sense. Then when your targets are hit, you know confidently that you’re paid a decent day’s wages for your efforts and good marketing skills.
Marketing Error #4 “If I don’t get my price, I’m just going to store it” Using long-term grain storage as a marketing strategy works only once in a while. But it can often backfire. Your breakeven calculations and your pricing targets should be designed to move crop in the same crop year. Storing grain for the homerun seldom works. Risks of spoilage and even theft have to be considered. Design your program to move your grain profitably each year. If hot prices appear, look one year forward. Consider locking new crop bids profitably well in advance of the seed drill should winter markets get exciting.
CURRENT MARKET OBSERVATIONS:
The watch is on crude oil. Developments over the week end heightening geo-political tensions supported a recovery in crude oil and precious metals today.
CRUDE OIL: Long-term still points down. Expect key WTI support of $64.50 per barrel to be tested eventually on weakened demand.
GRAINS: Generally bottomed. Some price strength in corn, barley, peas, flax recently. Believe bottom is in, but bids could drag into early 2025.
CATTLE: Recent bid weakness. Stock market is the main watch. Personal opinion, but equities are now on borrowed time. Expecting a sudden reversal sometime soon.This will impact the cattle board.
PRECIOUS METALS: Now oversold after last week’s thrashing. USD NOW OVERBOUGHT. Crypto capital gains to be given a free ride (no tax) suggested by Trump? Crypto manipulation for all to see . . . .
JANUARY CANOLA
Will U.S. tariffs impact canola oil? Hedgers note: Heavy resistance seen at $675/MT. Support now seen at $625/MT. RISING CANOLA TRADING WINDOW, BUT TRUMP A WILD CARD . . . .
DECEMBER CORN
Firming corn and barley bids. Cash trend gradually up. But if oil blows a tire, so will corn and ethanol. Dec resistance seen at $4.40 per bu. Stay tuned to Errol’s
JANUARY SOYBEANS
Hedgers Note: $10 per bushel is a fairly strong line in-the-sand. Beans are coming to a crossroad . . . retest of $10 or a move toward $10.50 per bu. Crude oil may have a lot to do with the direction of beans straight ahead.
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