I’ve been chasing soybeans all week. That can happen in the fall when you get good weather, and the soybeans aren’t quite mature yet. Oftentimes, the soybeans are dry, but the straw is green and that makes for some challenging harvesting conditions to say the least. I say I’m chasing soybeans because my remaining acres are still too green to harvest. As every day goes by it gets closer. Hopefully, by the end of next week chasing soybeans will be over.
The next question will be when to turn those soybeans and forthcoming corn harvest into cold hard cash. One of my favorite writers is our own DTN’s Elaine Kub, who last week wrote an article here on DTN entitled, “The Answer is Almost Always ‘Sell Some Grain’” in the piece Elaine talks about the whole job of farming is to take seeds, soil and sunshine and turn them into cold hard cash. She muses that you could know all kinds of things about your farm and your equipment but if you never turn the last bit, which is turning grain into cash then you aren’t farming. She likened it to a cute horticultural experiment, not a commercial business. If you get a chance to read Elaine’s column this week it is well worth it.
When I read Elaine’s piece, I couldn’t help but compare to some of the things that I say about marketing grain. One of my go to lines when writing commodity commentary is to ask producers to market grain where they feel comfortable. I’ve also said that standing market orders can be a tremendous tool for Ontario and Quebec farmers as we are constantly weighing grain futures prices versus the fluctuation in the Canadian dollar. Having some type of marketing tool available to hit cash targets is often different than what our American friends do with the king U.S. dollar. Needless to say, at the end of the day when you market your grain you need to feel comfortable.
What that is probably different for everybody. Elaine documented several cases of good and bad on the farm when we should be selling grain. I got the impression that it was a little bit like dollar cost averaging, selling grain a bit every month to get the best average. There are a myriad of ways to feel more comfortable marketing grain, but as Elaine implied it never should be terrifying. Daily market intelligence is key.
What do I mean by that? It means immersing yourself in all the credible information that you can get about our markets. That means reading what you can about our grain futures markets and taking advantage of some of the credible commentary on social media as well as other services such as DTN. I have often thought agronomy gets way too much coverage in our agricultural media versus agricultural economics and marketing. However, I also believe that it is that way because most farmers are not interested in marketing. That’s why agronomy seems to win every time.
One of the problems with agricultural economics and marketing is that there are usually no correct answers. The correct answers from somebody like myself are always kind of shifting and fluid. For instance, I often get the question “what is the price of corn going to be?” You know my answer. In fact, nobody knows but you have to look at all the market factors and try to put together what you think works for you. The right answers are always buffeted and affected by so many moving pieces.
Daily market intelligence in Canada is also not the easiest thing to decipher. For instance, I think it’s good that we look at our grain futures markets on a daily basis and try to understand why they do what they do. A good understanding of future spreads is essential in my opinion. However, there is a dearth of information about the behavior of cash grain markets in Ontario, Quebec and Western Canada. I’m paid to try to understand how it works and I’m paid to find out how it works but even after all these years of trying to find out cash price information is held close to the vest by many of the big end users in Canada. If you want to learn something publicly about how cash grain sales take place you won’t find it written down anywhere here.
I have tried over a career to change that and I will continue to. In the meantime, maybe it is time to sell grain like my colleague Elaine said. What I do know is it’s never good to sell grain in a vacuum of information. It’s much better to have all your ducks in a row, all the market factors lined up and be in a place where you are comfortable. Then sell grain and never, never look back.