Too often producers think the important part of marketing is having the right information at the right time. I've been in this business for over 33 years now and I can assure you that that is not normally the problem. The challenge in marketing is knowing what to do with the information and how to make decisions.
I've often joked in seminars that have if God himself was to stand here and guarantee producers exactly what was going to happen in a market, 90 percent would still go home and wait to see if He was right.
This is a tough business in marketing; because of increased input costs, it is now more important than ever.
The accompanying illustration is an interesting analysis of the various phases of marketing. Those of you who read this column regularly know that my opinion has been that a major long-term top was made in the grain markets in June. It will be several years before we get back to those levels unless an enormous production problem occurs.
With that said, I think most people would agree with me that the majority of producers are somewhere between stage five and stage six on this year's marketing program. How and why does this happen?
To begin with, most of us — whether we are doing it consciously or subconsciously — compare today's price to another price to determine whether it is good or bad. On the way up in a bull market we typically compare today's price to the lowest of the previous six months, which is why the majority of producers sell way too much way too early in a bull market.
That has now changed. Corn, soybeans, wheat and cotton are all in bear markets. So today comparison is made to the highest of the last six months and many people have concluded that prices are “too cheap” to sell.
Consequently, in bear markets people hang on waiting for the market to go back to “where it was.” This never changes!
Over the last two years, producers have learned to buy their energy inputs early then not sell grain early. It is my opinion that that is the strategy people will now implement this coming year when in reality one should be buying energy inputs as late as possible but be an aggressive forward seller of grain.
The trends have changed and your marketing program needs to do so as well.