Harvest brings its fair share of unknowns. How much corn will I yield? What price should I look for? Who do I sell to?
Certainly there are things you can’t control (e.g., the weather, politics, pandemics), but having a firm grasp of your data — current inventories, your average cost of inputs, estimated profit by field, and more — can empower you to make more confident, profitable decisions.
In addition to sharing their perspectives on marketing, experts Tommy Grisafi, president and CEO of Indiana Grain Company, and Angie Setzer, Vice President of Grain for Citizens LLC, emphasized key points to keep in mind and where data can help going into harvest (we’ve provided links to their specific video comments below).
1. Don’t Be Tempted to Lock in Inputs
Despite looming inflation, both panelists warned against locking in input pricing without selling too. Angie explained that 2021 floors for corn and beans are relatively established, so it doesn’t make sense to lay down a lot of money to lock in input pricing when your biggest risk is 10 to 15 percent inflation. Tommy wants farmers fighting for the upside while also recognizing that they’re going to see inflation on inputs. He added, “If you’re committed to locking in some inputs, make sure you also get some sales.” Also important? Understand the ROI on your inputs last year to inform purchasing decisions for next season.
2. Just Because Interest Rates Are Low Doesn’t Mean You Should Take on More Debt
Instead of assuming more debt, Tommy recommends farmers use the lower interest rates to get organized financially and stressed the importance of finding a banker who can help you do that. Cheap money is not free money, reminded Angie, and there’s never a good time to carry a large amount of debt.
3. Get a Good Marketing Plan in Place
It starts by taking inventory of where you are and what you need, explains Angie. Don’t ask the question, “What have I sold?” — your risk lies with what you have unsold. Find someone to help you evaluate your plan, whether it’s someone you hire or a group of your peers.
4. Consider Scale Selling
Scale selling removes a lot of buyer’s remorse, explains Angie. “Say you start with 10% at $9.50, then do another 20% at $9.30 and another 10% at $9.60. Build an inverted pyramid, start with smaller increments at lower prices and sell more as the price goes up so you enhance the weighted average.”
5. Understand the Opportunities Specific to Harvest 2020.
Whether you have room to store your grain or not, Angie recommends taking advantage of some of the pricing opportunities this fall, but understand how the spreads can work for you. The reality is, says Tommy, farmers sell grain for two reasons. One, they need money, or two, they’re out of storage. Ideally you’ve been tracking yield and inventory all season, so you can quickly make the determination of whether and how much to store or not.
6. Find a Grain Buyer Who Has Your Best Interests in Mind
Your grain buyer should be your best teammate. If you don’t have a good relationship with your grain buyer, find someone else to work with.
7. Use Whatever Tools are Available to Help Drive Decisions
There’s a lot of uncertainty around harvest. But, warns Tommy “…you can’t just call the elevator and sell unlimited bushels and then tell them you didn’t produce them.” Take advantage of the tools available to limit your unknowns. Making decisions based off of data and numbers vs. emotions will not only help you sleep better, but also likely be more profitable.
8. Focus on the Future and Move On
Historically, it’s always paid off better to be a seller than a buyer of grains. Tommy reminded us that big bull markets only come around once in a while, so be realistic.