“Don’t Call Me an Expert -- This is Just the Way I do Things”

Using a Marketing Service to Help Sell Grain

By Jerrod Sandness, Gwinner, N.D. 

Two years ago I grew a few thousand acres of wheat.  Last year it was about 120 acres, and this year it’s just corn and beans. I was kicking myself early on for not putting wheat in, but not when the scab started showing up later in the season.

A lot of people around here last year had 70-80 bushel wheat, but ours was so-so, around 50-52 bushels. That 120 acres of wheat was no-tilled into wheat stubble and it didn’t come up the best.

Wheat just didn’t pencil out for me this spring. I’m looking for around $4.00 to consider it, and $3.50 wheat just didn’t interest me. I figured I needed 50 bushel on wheat to break even, and 107 bushels for corn. Our proven yield on corn is 135 bu/ac and for wheat it’s about 48 or 50, so I guess I figured I’ll take my chances on 107-bushel corn.

That’s where I start my approach with marketing, by sitting down and looking at where prices are and where they look to be heading, in relation to my breakeven prices. I listen to the markets on the radio and read the marketing articles, but we farm a lot of ground and I don’t have the time to watch the markets as closely as I should. So that’s why I rely on someone to do all the watching, or most of it anyway.

I’ve been farming for about 13 years, since ’92, and have been working with Progressive Ag. I’ve been happy with them, so I guess that’s why I’ve stuck with them for about five years now.  They’ve made me way more money then they’ve cost me.  They’re not 100% perfect but when it comes to predicting the markets, nobody is.

I don’t hardly sell grain unless I talk with Randy (Randy Martinson, a marketing consultant with Progressive Ag) first. If I have a feeling it’s time to sell I’ll give him a call.  Sometimes he talks me out of a sale and sometimes he doesn’t, but I suppose about 75% or 80% of the time I follow his advice.

I think that overall, I’m selling better than I would on my own. Last year, for instance, I had my corn and beans contracted up to my insurance guarantee (RA) before planting, and it turned out to be a good decision. I don’t think I would have contracted that many bushels of grain if Progressive Ag hadn’t been advising to do so.  I did buy out all my corn contracts last August because I didn’t think the crop was going to make it, but I still made money doing that.

Usually I sell grain in increments, about 10 to 15% at a time, unless the market’s high or near a top, like soybeans in the spring of ’04, then I’ll sell more.  We’ll often use a futures-fixed contract at the elevator and lock in the basis later. It’s been about two years or so since I’ve used options. I’m not against using options and I’ve used them in the past, I just haven’t found a situation lately where I’ve wanted to use them.  Again, advising when and how to sell grain with various contracts and options is where a grain marketing service is worthwhile.

Every market adviser has its own menu of products and services that it offers, and one that Progressive Ag does is “Whole Nine Yards,” a concept in which essentially, they sell your grain for you, coordinating the marketing with the price components of your crop insurance. They promote the concept on performance, that “if we don’t make you money, you pay no fee.” I haven’t tried this program but I probably wouldn’t have a problem with it because I usually end up doing what Randy advises anyway.

You can see where some might have a problem giving up control of their marketing to someone else, though. Tough to do. But I suppose for other guys, if they trust their broker and don’t want the stress and hassle of grain marketing, it’s something to consider. I suppose it’s not much different than trusting a custom applicator to put on the right chemical on your crop at the right time, or to custom harvest your grain. If you can trust someone to protect your crop or to harvest it, then it might not be so strange to trust someone to market it.

As of early August, I had about 20% of my ’04 corn left, and was sold out on the beans.  I have about a third of my new crop corn sold and about 75 % of my new crop beans.  Maybe I sold too much new crop beans too early, who knows.  It could have worked the other way too, where a guy doesn’t sell when he has the chance and kicks himself later when the markets turn lower. 

The way I look at it, a guy always wants to lock in a profit when he can, and when I was pricing my new crop beans (I began contracting ’05 beans last Feb/March), I knew I was locking in a profit (about $6, assuming a 40 under basis) and could always do puts or calls later in the season. 

– As told to Prairie Grains editor Tracy Sayler

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List of Grain Market Advisors

Go to  www.smallgrains.org. Under Useful Information and Links, click on Grain Market Advisor List.