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Sales Advice
How to create a grain marketing plan is explained by Danny Morris, area farm
management specialist with the University of Tennessee Extension. The material was
developed jointly by Morris and Dr. Aaron Smith.
Photo by John LaRose, Jr.
Specialist: Marketing Crops Is A Year-Round Process
BETTY VALLE GEGG-NAEGER
MidAmerica Farmer Grower
MILAN, TENN.
“Marketing Corn Based on Growth Stages,” was an issue expounded by Danny Morris, area farm management specialist with the University of Tennessee Extension. He covers 10 counties in West Tennessee and is housed out of the Gibson County office. Morris spoke recently at the Milan No-Till Field Day on how to create a grain marketing plan.
The presentation material was developed jointly by Dr. Aaron Smith and Morris, however, due to the birth of Smith’s new son, he could not be in attendance.
Morris works with producers on topics related to crop budgeting, farm financial planning, farmland leases and anything ag economic related that can impact a farmer’s bottom line. His management discussion focused on marketing grain based on the growth stages of the crop.
“We’re trying to encourage producers to develop a marketing plan to get into the growing season based on their cost of production,” he said. “We are encouraging producers to evaluate that plan continuously throughout the growing season at the various growth stages of the crop. We’re recommending that producers market zero to maybe 25 percent of their crop during the pre-planting phase, which is from January to April. Once they get their seed in the ground and farmers know they have a good stand, they can be more aggressive with selling more of their crop.
“Between the months of April to May, we recommend that percentage go from maybe 10 percent to 40 percent. We recommend this percentage range so as not to oversell. That way, in the event that farmers don’t make it successfully through the pollinating season and maybe experience a negative impact from weather conditions where yield is lower, they’re not committed to something that they cannot fulfill.
“The next stage of the crop is the pollination, tasseling and silking stage. Between May and July, we recommend that producers up their marketing from 40 percent to 70 percent of the crop,” Morris advised. “That way, hopefully, they can capture a market rally. During the months of May, June, and July, we are in a weather market. Historically, this is when you see most of the commodity prices increase. We try to encourage farmers to focus on the key components of their marketing plan, always evaluating their cost of production, and always keeping in mind a good average yield. Maybe look at a 5-10 year average yield and don’t just look at a three-year average.”
Over the last three years, there has been an above average amount of rainfall. If the past three-year average is used in projections, yield could be grossly overestimated.
“The next part of the talk is to encourage producers to look beyond the local level,” he said. “We are trying to get them to look also at what’s happening in other countries. What’s going on with global supply and demand are market fundamentals that definitely impact commodity futures.”
Producers must know their cost of production and keep an eye on what’s going on at the local elevator and its grain price. They must also scan the futures through the pipeline of the USDA market reports. They need to study acreage estimates because those definitely have a major impact on market prices.
“We’re giving them a handout on the key market movers, the key reports the USDA releases, and other things they need to observe throughout the year,” Morris said. “We’re just trying to help them be as profitable as they can be. Also, as an area farm management specialist, I help people develop budgets and marketing plans that are based on their cost of production.
“So, our take-home message is that UT extension provides solutions at the county level to help local farmers. We release information that they can take home and use on their farm so they can be more profitable, stay in business, and be successful,” he summed. ∆
BETTY VALLE GEGG-NAEGER: Senior Staff Writer, MidAmerica Farmer Grower
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