Producers frequently say that marketing their production is the toughest management challenge they face. It is widely held that the influx of investment cash into commodity funds has added a new element of uncertainty to the futures component of farmers´ prices. At the same time, the advent of bio-fuels and changing transportation patterns have introduced new volatility into futures markets and local basis bids.
This decision aid is designed to help make the farmers´ pricing job easier. The Aid´s four-section grid displays at a glance the cash and/or futures/options tools appropriate if a farmer expects futures prices to rise or fall and basis to strengthen or weaken. The farmer/grain marketer is assisted with sorting out the marketing alternatives that are appropriate for given market conditions. Each alternative or combination of alternatives within a quad is to be considered as an appropriate sales method to use in making a specific grain sale. For example, if the Futures Price Trend is Up and the Basis is Strong then one of the five marketing alternatives listed in the upper left quadrant would be appropriate for use.
Basis strength and/or expected price direction serve as indicators for selecting the proper sales method. The aid uses price trend analysis in providing guidance to the sales method and timing of the farmer´s grain marketing decision.
The aid can be printed and posted anywhere to help a producer make a quick marketing decision throughout a marketing year.
|Conference||2007 National Extension Risk Management Education Conference|
|Presentation Type||30-Minute Concurrent|