When you’re choosing contracts to include in your marketing plan, there are several factors to consider. What's your target price for your commodities? How much risk are you willing to take on? How comfortable do you feel tracking the markets? Your answers to these questions will help you decide which types of contracts make the most sense in your plan.
To get started, it’ll be helpful to understand your options and how each type of contract fits in a diversified marketing plan.
Market like a pro and lay the groundwork for a diverse, profitable plan with these building blocks.
Protect yourself from the risks of volatile markets with a guaranteed minimum price for your crop.
Gain added control and flexibility to take advantage of opportunities and act on your market movement predictions.
Choose when to set your basis or futures to establish a cash price. Simplified contracts with straightforward components.
To get your target price for your commodities, make the most of every opportunity, and reach your profit goals, it’s important to keep an eye on your marketing plan throughout the year and adjust to changing market conditions.
Here are some things you can think about in each season.
During the growing season, you have a lot on your plate — feeding and watering your crops, keeping an eye out for potential problems, getting ready for harvest. This is also the time of year when you can start forecasting your yield and emptying your bins to make way for new grain.
Tip: Based on historical data, prices tend to drop in August. If you haven’t already established a basis, now’s the time.
Your hard work and preparation paid off, and it’s time to harvest your grain. Harvest time means long days in the fields and extra attention to equipment to make sure everything is in good working condition.
Tip: This is the time of year when the supply of grain is at its highest. That typically means lower prices.
During winter, you can take time to analyze your harvest, figure out what went well and what could’ve gone better, and start making grain marketing plans for next season.
Tip: The USDA World Agricultural Supply and Demand Estimates (WASDE) report is released the second week of January and the USDA planting intentions report is released on March 31. These reports can be major market movers. Consider protecting unsold bushels heading into these releases and capitalizing on market movement before and after the reports.
We know you’re busy preparing your fields, planting your crops, and setting yourself up for a successful growing season this time of year. There are also key market opportunities, so don’t forget to carve out some time to think about your grain marketing plan.
Tip: Risk premiums tend to be highest in the spring, so this can be a great time to start pricing your grain instead of waiting for harvest-time lows.
At Cargill, we’re committed to partnering with farmers like you to help improve the future of farming, preserve our natural resources, and promote the long-term success and prosperity of your farm.
