Transcript Session 1- Developing a Plan

DEVELOPING A
MARKETING PLAN
What is the basic information
you need to develop a
marketing plan?
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Determine the amounts of grain
to sell
Determine the marketing tools
you want to use
Determine when to sell
Form a realistic price goal
When should I Sell?
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We have two years to sell a
crop.
• Expand your window
• Spread your risk
• Sell in smaller increments
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Recently best prices have
occurred in fall prior to planting.
SELLING SEASONS
ACCORDING TO ROACH
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Storage Season
• manage inventory--basis
• maximize returns to storage
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Planning Season
• winter months
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Selling Season
• Months of Mar. Apr. May and June
Corn Prices--Normal Seasonal Pattern
Soybean Normal Seasonal Pattern
SELLING SEASONS
BY COUNTRY HEDGING
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Pre-Plant
• Recommended 10 to 20% of Crop
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Growing
• Recommended 10 to 20% of Crop
• summer weather market
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Harvest
• Recommended 10 to 20% of Crop
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Storage
Deadlines
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March 31 for pre-plant season
• Planting intentions report
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June 30 for growing season
• Crop size generally known
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Same dates apply for stored
crop--all sold by June 30
YOU MUST SELL BY YOUR
DEADLINE
December Corn
Seasonal
December 1998 Corn chart
Planting Intentions Report
Crop Estimate Report
November Soybean
Seasonal
November Soybean Chart
Planting Intentions Report
Crop Estimate Report
What tools do I use?
Elevator or grain merchant
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Cash Sales
Forward Cash Contracts
Basis Fixing Contracts
Hedge-to-Arrive
Minimum Price Contracts
What tools do I use?
Futures and Options
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Sell Futures Contracts
Buy Put Options
• Fence
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Buy Futures Contracts
Buy Call Options
• Sell and buy a call
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Combinations with Cash
How well equipped is
your tool box?
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The more tools available the
easier it is to meet your
marketing goals
The added tools give you added
flexibility
Learn about the tools and how
they work
Picking the Proper
Marketing Tool
Basis your market
indicator

Know what the normal basis is
• Know the seasonal patterns
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Tells us what tools to use
Tells us if it will be profitable to
store
Can be used to time sales
Used to indicate market
conditions
CORN BASIS
SOYBEAN BASIS
REALISTIC PRICE
GOALS
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Start with your cost of production
plus a profit
Look to USDA projections
Look at Carry Over numbers and %
of annual needs
Look at retracements
look at market newsletter
projections for various crop sizes
USDA Price Outlook
USDA Price outlook
Carry Over as % of
Usage for Corn
Carry Over as % of
Usage for Soybeans
Supply Estimates
Retracements
Difference between high and low = $0.941
1/3 Retracement (.941 / 3) +$1.854)= $2.17
1/2 Retracement (.941 /2) + $1.854)= $2.32
2/3 Retracement (.941 /3) X 2) +$1.854)= $2.48
Your Home Work
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Think about how much crop you
want to sell in each marketing
season
Figure out what marketing tools you
like to use
Read market newsletters and other
information--Price outlook
Be ready to write your marketing
plan during the next class session