The Marketing Mind Game
We all breathe a sigh of relief once all of the grain is in the bin. However, it does not take long for the relief to turn to anxiety as we begin think about marketing the crop.
This anxiety occurs at the intersection of how much we spent per bushel to grow the crop, what the market is and will offer for the crop, and how long we can hold it, hoping for prices to rise. I call this anxiety the “marketing mind game.” There are a few things you can do to reduce the anxiety you have about marketing grain:
1. Be satisfied with the decisions you have made.
One of the biggest obstacles to the marketing mind game is the fear that we are making the wrong marketing decisions. For example, you might have felt regret for the sales you made after you found out that your neighbor got a higher price.
In reality, there are no wrong marketing decisions. Marketing decisions should not always be based on getting the highest price. There are good reasons to sell grain below the highest price — for example, stopping storage expense, meeting cash flow needs or cleaning out the bin for the upcoming crop. Selling grain for these reasons means you are making good marketing decisions.
Be satisfied with the sales you have made if you made them for solid personal or financial reasons. The entire goal of marketing is to ensure farm survival, and this can only occur when financial standing is taken into account.
2. Be cautious of information overload.
From text messages to end-of-day market commentary to endless newsletters, there is an infinite supply of marketing information and opinions. In some ways, this barrage of information makes us less reactive to the market. These opinions get mixed with our anxiety, making it more difficult to make marketing decisions, especially if the sources of advice contradict each other.
To avoid information fatigue, find two or three trusted information sources. By filtering your information intake, you are more likely to retain the information you are receiving and be more effective at making marketing decisions.
3. Have realistic expectations of the market.
Another challenge of the marketing mind game is not having a realistic expectation of where cash prices should be. I talk to a lot of producers who wish the cash price for corn was above $4 per bushel and that for soybeans was above $10 per bushel. The reality is that the average cash price for the 2018-19 corn crop will be $3.25-$3.95 per bushel and soybeans will be $7.85-9.35 per bushel (December USDA WASDE). Waiting to sell corn at or above $4 per bushel may keep you from making sales in the mid to high $3-per-bushel range.
Find a price barometer that you can gauge prices against. This can be your cost of production, cash flow price, or the predicted cash price range from USDA. This allows you to look at prices more objectively to determine if you are making a sound marketing decision.
4. Write a grain marketing plan.
One of the easiest ways to defeat the marketing mind game is to write a grain marketing plan. Marketing plans consist of a series of marketing statements such as the following: Sell X number of bushels at $X.XX per bushel by X date.
By breaking the total amount of grain you have to sell into smaller units, and setting both price and date goals for that grain, you can more logically analyze your marketing strategy. Once you have your plan written, share it with someone like your spouse or banker who will help you stick to your marketing goals.
Furthermore, you can post it somewhere to remind you of your goals. Marketing plans are not written in stone; they can be adjusted as the market changes. However, without a written plan, it is much easier for emotion to take hold of the decision-making process.
We all get lost in the marketing mind game, but by using these steps, you can remove the anxiety from your marketing plan to successfully price your 2018 crop and concentrate on other aspects of the farming operation.