The 2018 State of Grain Marketing report, prepared by FarmLogs, provides some helpful farm management figures. A recent survey of 1000 growers in the U.S. showed that 70% said that crop prices are one of their biggest challenges.

At the same time, 77% know their cost of production per acre. So, the profit opportunity is not on the expense side of the Income Statement, but the revenue side, since crop prices can fluctuate significantly weekly or even daily throughout the year.

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Meanwhile, when asked what aspects of grain marketing do you feel least confident about, "managing the futures price for new crop", "managing basis for new crop" and "choosing which hedging products to use" ranked the highest. Despite this, some of the most flexible hedging tools like options & future that are designed specifically to deal with this pricing uncertainty, are used by only 7% of farmers. 

Bottom line, 70% of respondents said that how familiar they are with a marketing strategy is the biggest factor in deciding how to sell their crop. This makes sense since we are only going to use something we are familiar and comfortable with. So, an important part of my job is providing farmers with the awareness and understanding of options & futures pricing tools.

As written by David Derwin, Portfolio Manager-Commodities/Equities at PI Financial, a Grain World 2018 tradeshow exhibitor.

PI Financial is committed to delivering experience-driven, objective and personalized advice within a comprehensive range of financial products and services. To learn more, visit booth #36 at the 2018 Grain World Conference and Tradeshow. To connect directly with David, call 1-844-982-0011 or visit commodity-options.ca for all your farm marketing options.