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How to make grain marketing decisions in a volatile market

May 25, 2021

3 factors to think about before making grain sales. Hint: they have nothing to do with current prices

By: Darren Frye 

Many farm leaders say that marketing their crop is one of the most challenging things they do – and it’s true that grain marketing can be a tough part of the job. In all types of markets, thoughts of uncertainty about what may happen – and sometimes even anxiety or fear – are common.

When we’re in a volatile market like 2021 has proven to be so far, those feelings can be multiplied in an exponential way. Depending on factors like how you typically approach marketing plans, decision-making and your personality type, you might find you’re more inclined to make moves or simply freeze with indecision.

What you need

The most important thing you can do to be ready to make good marketing decisions for your operation is to first have and know the right information about your operation. That’s right – I didn’t say having information about the market – but about your own operation.

A farmer could have all the information and analysis of the markets at his or her fingertips, but if they don’t have the key financial data they need about their own operation’s status and needs, it doesn’t really make much of a difference.

Three questions

Here are three questions to ask yourself as you consider how you’ve been approaching the 2021 market so far, and how you want to move forward in the future.

  1. Do I have the right financial information about my operation? Having updated financials on your farm is key. This includes your breakeven costs and other projections. You need to have a clear handle on your farm’s financial situation before you go into any marketing decisions – long before any decision needs to be made. This can help you take some of the emotion out of the process. That’s even more important in a volatile market like 2021 because when prices are high, emotions can run even higher.
  2. Have I run scenarios around what may potentially happen? No one can know for sure what will happen in the market but thinking ahead about potential market scenarios is a smart move. Work to run different scenarios using your farm’s numbers or work with a market advisor to help with that.
  3. What is my marketing personality type? Just as there are different personality types for humans in general, farm leaders can have different marketing “personality types.” The most important thing is to know your own marketing tendencies so you can recognize if your tendencies are actually working against you in some situations. Some types are more inclined to heavily analyze a situation to the point that they run into “analysis paralysis” and become unable to make a decision at all, while others might charge forward without really thinking things through and later experience regret. No tendency is “wrong” – it’s just helpful if you can recognize it in yourself when it’s happening and see if you can try to counter it. This can also help lower emotions around the decision.