Video series explains marketing
A series of educational videos addressing various components of grain marketing fundamentals was recently created for Iowa farmers, called Crop Marketing 101.
Featuring faculty and staff from Iowa State University Extension, it can be seen on the ISU Ag Decision Maker website and ISU Extension’s Agriculture and Natural Resources YouTube channel.
“The 10 videos were produced with a goal of helping farmers figure out the intricate details of marketing and selling their crops and livestock on the Chicago Board of Trade,” says Chad Hart, ISU Extension economist. “Marketing is difficult. The videos offer helpful hints on cash sales, forward contracts, future outlooks and strategies for commodity options.”
“Unpredictable events can shape the market and commodity prices,” notes Steve Johnson, ISU Extension farm management specialist. “While production risks are at the forefront of most producers’ minds, don’t ignore the need to manage the farm’s overall financial risks. The initial concern may be that farmers today have to market crops at lower cash prices, prices not seen since 2009. However, part of the solution is looking beyond the next six months.”
Farmers concerned about successfully marketing their crops should watch the Crop Marketing 101 videos. “When planning for the 2015 projected tight profit margins, you should consider five financial risk management strategies: protect your working capital, secure repayment capacity, control your costs, maximize your yield and manage your price risks,” says Johnson. Details for using these risk management strategies when planning a farm financial strategy are in an article in the June 2015 Ag Decision Maker newsletter at .
The new videos explaining the marketing fundamentals are from three to eight minutes in length and include:
• Introduction to Crop Marketing — an overview of corn and soybean marketing, including the four basic marketing tools: cash sales, forward contracts, futures and options.
• ISU Crop Marketing Information — resources from ISU
• Basis, Futures Carry and the Cost of Storage — covers crop basis, futures carry and the cost of grain storage
• Market Fundamentals (Supply and Demand) — examines the balance between crop supply and demand that determine both futures and cash prices
• Technical Chart Signals — examines chart signals on futures charts
• Seasonal Price Trends — reviews corn and soybean price patterns that repeat themselves with some degree of accuracy year after year in crop markets
• Crop Marketing Strategies — learn to use a crop marketing matrix based on your expectation for futures prices and basis to determine appropriate strategies
• Marketing Tools: Futures — reviews role of futures contracts traded on the Chicago Board of Trade that farmers can use to reduce crop price risk by hedging
• Marketing Tools: Options — Teaches basics of both put and call options used for managing futures price risk
• Developing a Crop Marketing Plan — shows how to put together a proactive strategy to price your crop
“Understanding the basics can get producers that much closer to selling or buying at the right time and price,” says Johnson. “Farmers want to make a profit, and the tools — such as the crop marketing matrix, or learning to put together a planned strategy including goals based on time and finances, storage capacity and production, anticipating insurance and risk needs — can reduce a producer’s apprehension.”
This article published in the July, 2015 edition of WALLACES FARMER.
All rights reserved. Copyright Farm Progress Cos. 2015.