Taming the Bulls and Bears

Common Grain Selling Mistakes: Old Habits, Self-Doubt

By Betsy Jenson, Ag Commodity Instructor, Northland Community and Technical College

Recently, I was trying to explain grain marketing to someone unfamiliar with farming, and he didn’t understand why farmers don’t just sell a percentage of their crop every month, and be happy with the average.

As farmers we want to do better than average, but has your farm accomplished that? Yearly price charts for many elevators are available on the Toolshed website (www.smallgrains.org/Toolshed/toolshed.htm).

The average cash price for 2001 at one elevator in Minnesota was $3.08.  Did your farm beat that average price? If not, we need to look at what we can do better.

Now’s a good time for that.  With your bins full of 2001 wheat, there is not a better time to look back at the marketing decisions you made for that crop.  I’ve never met anyone who has sold 100% of their crop at the top of the market.  Perfect marketing is impossible, but we should try to improve our techniques year after year.

One of the biggest mistakes farmers make every year is doubting themselves.  I see it in every marketing group meeting I attend. There are great ideas coming from the marketing groups, but farmers don’t have enough confidence in themselves to implement those decisions.  Group members are learning how to make better sales decisions, but instead they revert back to old habits: harvest and store unpriced. The government paid farmers to store their grain in the 1980s, and we just haven’t been able to leave that mindset. 

As we begin a new year on the calendar, I resolve to start a new year in grain marketing as well. The 2002 crop may seem months and months away, but there isn’t a better time to start looking forward and writing down our plan.  I want to emphasize that you cannot just think about your plan, it needs to be written down. 

As I mentioned before, many farmers doubt their own decisions, so share your plan with someone else; a spouse, lender, elevator manager or farming partner. You may need a support system to make sales because many farmers become paralyzed in an upward market.  I suppose we just haven’t had enough experience dealing with prices going higher.  We’re comfortable with prices dropping because we’re used to that, but do you have what it takes to sell when the market is going up? That is where your support system could help you make the right decision.

Common mistakes include increasing original price targets, ignoring time deadlines, holding grain too long, trying to sell 100% at the top instead of incremental sales and losing track of the markets during busy times. All of these mistakes have simple solutions, and if you are making the same mistakes year after year, you need to find a way to change your habits.

It might be painful to look back at the mistakes you made for marketing the 2001, or even the 2000 crop, but I encourage you to write them down, and pull them out every year. A market diary or notebook might help; consider how interesting it would be to look back at your notes over the years to see when you sold grain, how much and at what price, any market tools you used, what worked and what didn’t.

Marketing is difficult to criticize because hindsight is 20/20 and it’s easy to look back and think “I should’ve…”.  Don’t expect perfection, but expect improvement. Don’t set your goals for marketing the 2002 crop too high. A simple goal of beating the local elevator cash price by 15 cents would be a great first step.  You don’t have to be perfect, or beat your neighbors. But at the very least, we need to identify and correct the marketing mistakes we repeat too often.

“Taming the Bulls and Bears” is a market education feature of Prairie Grains, made possible by the Minnesota wheat checkoff managed by the Minnesota Wheat Research and Promotion Council. If you have a question or topic related to marketing that you’d like to see addressed in this feature, send it to: Minnesota Wheat Council, Attn: Prairie Grains Editor, 2600 Wheat Drive, Red Lake Falls, MN, 56750; Phone: 1-800-242-6118 or email Jensen: bjensen@nctc.mnscu.edu.