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BRIAN HOOPS

By Staff | Feb 11, 2011

Today’s farmer is forced to wear many hats. The American farmer must be an agronomist, a seed consultant, a meteorologist, a politican, a veterinarian, an accountant, a repairman, a machinery operator and, most importantly, a marketer of his produce.

Marketing can and should be one of the most important and fun aspects of your farm business. However, being good at marketing and having fun at it, requires a thorough understanding of the process. It also means a lot of hard work and a lot of time. Good marketing can mean the difference between a marginal farm operation and a very successful one. Not every farm operation has the benefit of having a good marketer making marketing decisions; however through training, hard work or by hiring someone else to help with the marketing process, each operation can improve marketing through 10 methods.

  • Keep your marketing simple. Have a marketing plan that is easy to follow and clearly illustrates your marketing goals and objectives. Don’t make it too complicated or hard to follow.
  • Know and understand the fundamentals of the market. Fundamentals are what determines the price of a commodity, not the technicals. You must recognize that fundamentals can and will change, however, know the fundamental trend and follow it religiously.
  • Be willing to use all the various marketing tools that are available. The days of being a cash-only marketer are in the past. Today’s best marketers refuse to be limited to only selling at cash price levels and are successful because of their willingness to use all marketing tools available.

This includes; futures, options, insurance products, and different basis and forwarding contracting contracts.

  • Know the technical trend of the market. Don’t pay attention to the daily technical activity as you will not be able “to see the forest for the trees” and will succumb to all the noise of the markets. Respect the technical trend and always trade with the trend.
  • Leave your ego somewhere else. Marketing is not about being right or wrong; it is all about being profitable. Admit and expect you will make mistakes in marketing – admit the mistakes, learn from them and move on.
  • Know when to forget about last year’s crop and focus on marketing the current year’s crop. It is hard enough to try to market one year’s worth of production, let alone to market two or more years.
  • Recognize marketing is an art form, not an exact science. It takes a special makeup and a special talent to be good at marketing. If you do not have the mental or emotional makeup, the time or the knowledge to market, hire someone else to assist you.
  • You can’t outguess the market, so don’t. You will not be perfect in this imperfect business, but you can be profitable. Use the marketing tools available and your knowledge and you can make money.
  • Use risk management. The farm operation is filled with production risks – weather, faulty equipment, the unknown – why add to your risk by trying to outsmart the market? There is no other industry in the world that has more ways of reducing risk than production agriculture. Be sure to use these tools to reduce your risk, not increase it.
  • Ask for help. Today’s producer has to be an expert in many areas: production, seed selection, herbicide and pesticide selection, mechanical and technical proficiencies, tax issues and accounting and marketing.

Today’s top producers seek professionals in all these areas and more. Don’t be afraid to seek help from a professional in each of these areas, especially in marketing.

Corn analysis

Corn closed the week $.34 1/2 higher. Last week, private exporters reported a sale of 120,000 metric tons of corn to an unknown destination and 101,000 mt of corn to Japan. The weekly export sales report showed net sales of 1,166,700 –a marketing year high – were up noticeably from the previous week and from the prior four-week average.This year’s net export profile is now at 1.152 billion bushels versus the USDA forecast of 1.950 bb.

Soybean analysis

Soybeans closed the week $.35 1/2 higher from last week. Last week, private exporters reported sales to China totaling 440,000 mt and 110,000 mt of soybeans to an unknown destination.

Census Bureau soybean oil stocks for December were reported at record high levels, while soybean oil used for biodiesel production in December was the lowest ever recorded since official monthly data began in 2006. Census Bureau end-December soybean oil stocks were reported at 3.474 billion pounds, marginally higher than the preliminary estimate last week of 3.469 billion pounds, but more importantly were up from last month’s 3.296 billion pounds and substantially larger than last year’s 3.110 billion.

The weekly export sales report showed net sales of 1,032,300 mt were up 32 percent from the previous week and 71 percent from the prior four-week average.

This year’s export pace stands at 1.41 bb versus the USDA forecast of 1.59 bb.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. Midwest Market Solutions is a full-service commodity brokerage and marketing advisory service, clearing through R.J. O’Brien.

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