In the world of commodity marketing, achieving consistent success is a challenge, particularly for farmers just beginning their careers. This struggle stems from a combination of factors, including a lack of marketing prowess or the misperception of one's marketing abilities. However, young farmers who are nimble in their approach to their markets may be best positioned to enhance their marketing skills and achieve long-term success.
Understanding and Beating the Market Average
One fundamental idea involves closely monitoring average crop prices within your locality. This simple yet effective approach entails recording the weekly closing prices at your local elevator or directly from your farm bin, comparing your average selling price against this benchmark at the end of each marketing year. Surpassing the average price consistently not only validates your marketing acumen but also sets a foundation for continuous improvement. This method offers a realistic measure of performance, steering away from the unrealistic expectations of always hitting the market's peak prices.
The Power of Incremental Selling
Adopting incremental selling is another pragmatic approach to market success. Selling crops in approximately 20% increments throughout the marketing year, especially during seasonal rallies, allows for a more balanced and less volatile revenue stream. This strategy leverages market highs, mitigates the impact of lows, and even accommodates bearish market trends, such as the ones most crops are locked in today. Incremental selling reduces the pressure of timing the market perfectly, offering a flexible and stress-minimized approach to commodity sales.
“For young farmers aiming for long-term prosperity, these two strategies may sound basic but are rarely implemented consistently”, commented Ranulf Glanville, an analyst with GrainFox.
By focusing on beating the average price and embracing incremental selling, farmers can navigate the complexities of commodity markets with more confidence. The journey to marketing success is not about the occasional windfall but rather the steady accumulation of profitable sales over time.
Glanville added, "Embracing these principles early on can pave the way for increased success with your marketing results over time. It can also help to cope with the stress of weak markets and unrealistic expectations created by embellished coffeeshop talk about how other farmers are doing. That's not something that is measured in dollars and cents but is also extremely valuable!"
