Tips for Soybean Marketing
It takes substantial planning and decision-making to grow a successful crop, and it’s important to be just as strategic when selling it. Shifts in global trade and a wet, slow harvest have made this year’s grain markets a bit challenging, but your soybean checkoff is here to help with tips from two experts in grain sales.
Seth Miller is a grain buyer for The Andersons, and Andrea Flowers is a Cargill merchant. They understand the challenges today’s growers are facing and work with them every day to develop successful marketing strategies. Here are a few tips from the experts.
Each year presents its own challenges and 2018 is certainly no different. With that in mind, it’s important to be realistic about prices and manage expectations, so you can capitalize on the best available opportunities.
“We need to look at the charts and be realistic about the market,” explained Miller. “Carries are fairly wide in soybeans and that’s good for those who have storage, but we still need to be realistic about our pricing decisions as we look a little further into the future.”
This year’s crop isn’t the only thing you should be thinking about. Both Miller and Flowers encourage growers to look forward to 2019 and start securing realistic orders.
“It can be hard when you’re not even finished wrapping up the current season, but start thinking about next year,” Flowers stated. “Historically speaking, some of the best opportunities for next year’s crop are right now.”
Get Back to the Basics
When the markets get overwhelming, it’s important to take a step back and build your strategy from the basics with a solid understanding of where your cost of production and breakeven numbers lie.
“We’re in a different environment now, so we need to refocus and get back to the basics,” advised Miller. “Know what your breakeven is on a per bushel basis for an average yield and use that as your baseline to market against.”
Miller also explained how this strategy can help you recognize profit opportunities.
“We’re at price levels that are closer to cost of production than we’ve seen in a long time,” said Miller. “That makes it especially important to understand what your costs are, so you can take a profit where you can.”
While it’s hard to prepare for every hiccup, having a proactive strategy in place will put you in a better position to face challenges as they arise.
“When we see flat prices at the levels they’re currently at, it can be paralyzing, but it’s important to be proactive,” explained Flowers. “After we get this big crop put away, the carry is going to erode a bit, so make sure you’re locking it in now and have a strong plan for the bushels you haven’t marketed yet.”
Flowers helps growers determine what inventory needs to be moved within the next few months and strategize how to get it picked up and delivered before it goes out of condition. Miller also emphasizes the importance of forward-thinking.
“I advise growers to have orders in place at all times,” Miller noted. “If those orders sit, I encourage them to stay confident and trust the reasoning behind the decision. It’s important to leave the orders in place until they expire or the bushels need moved.”
Diversify Your Risk
Farming is a high-risk, high-reward type of business, which is why diversifying the way you market your crop is essential.
“Diversify your strategies and don’t limit yourself when it comes to contracts,” said Flowers. “Incorporate some manage contracts, averaging contracts, spot contracts, traditional futures only cash contracts and mix them up.”
There are many marketing programs available to assist you, but even those are important to diversify.
“Be diverse in your marketing decisions and in the marketing programs you choose,” said Miller. “Doing so will help spread out your risk and put you in a better position for the future.”
With these key principles, you can strengthen your marketing strategy no matter the harvest, weather or market conditions.