Taming the Bulls and Bears

“Good Til Cancelled”

A Good Way to Fret Less About Selling Grain

By Betsy Jensen
Ag Commodity Instructor, Northland Community and Technical College, bjensen@nctc.mnscu.edu

Quantity versus quality is a common struggle we have in production agriculture. Do you want 60 bushel, 12% protein wheat, or 45 bushel, 15% protein wheat?  There never seems to be a clear-cut answer to the “quantity versus quality” debate, except when it comes to our grain marketing “intelligence,” where the overwhelming choice is quality.

Instead, we  are often plagued with quantity:  from neighbors to elevator managers to the so-called experts, there are just too many people willing to give their opinion of the market. 

However, the only opinion that really matters is your own. Do you think this is an acceptable price?  Can you make money at this level? Do you have too much risk because you are sitting on unpriced bushels? The decision to sell or hold has to be your own, and no one else’s.  The first instinct is often correct, but we get overwhelmed by opinions and begin second guessing the decision. 

Daily market news contributes to the “quantity” problem and to second-guessing.   I admit I’m as much of a sucker for a good farm report as the next guy, but should you really alter your grain marketing plan based on the morning news?  Does dry weather in Kansas during September really mean that wheat prices are going to rally?  Every day I can write down 10 reasons to be bullish, but I can also find 10 reasons to be bearish. For every bull there is a bear, but farmers tend to lean towards the bullish side. It’s much more enjoyable to farm if you think the markets are going up, and it’s very easy to focus on the bullish aspects of the market. 

Since “quantity” doesn’t mean nearly as much as “quality” when it comes to grain marketing, I have developed a few tips to help you minimize the amount of time you spend with this arduous task. The first, and most important recommendation I have is to use “Good Til Canceled” (GTC) orders.  I have talked about these before, and they are still the best way to market your grain.

Here’s how it works: You place an order to sell at a certain price with your elevator manager or broker, and that order will be placed every day until it is filled, canceled, or the contract expires.  If you are a farmer who missed selling $5 wheat last fall, you can place your order today to sell 2003 wheat at $5.00. (I don’t think it will get filled, but hey, it never hurts to place your order.)  Whatever price, that order will stay active unless you cancel it. By using a GTC order, you no longer have to watch the market every day, and you won’t miss another sales opportunity. 

I recommend that you review and evaluate your grain marketing every two weeks. Belonging to a marketing group is a great way to do this, or you can do it at home. Look at how many bushels you have priced and unpriced, look at the current price levels, and determine if you need to change the price or quantity of the GTC orders you have placed. Maybe your original GTC order was to sell 5,000 bu at $3.75, but prices have fallen and the market is struggling so you change your order to 10,000 bu at $3.55. Just 1 hour, every two weeks is all you need to stay current with your marketing plans.

I do believe that most farmers are good grain marketers with good intentions.  We just start over-analyzing and second-guessing those good intentions with the quantity of information available to us today.  Don’t waste time fretting and trying to determine what the market is going to do tomorrow.  Focus your time on making fewer, more informed sales decisions.

Jensen farms with her husband Brian near Stephen, Minn.  Her market education activities including this column are supported in part by the Minnesota wheat checkoff, directed 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, call 1-800-242-6118, or email Jensen: bjensen@nctc.mnscu.edu.