Let us ride shotgun with you

Written by Keith Brownell on Mar 10 2014

Category: Sell Grain

Today’s commodity markets require all the caution of a winter’s drive. Take risk out of the journey – invite a grain marketing advisor along.

A view from the cab of a truck driving down a farm road.

These are turbulent times. For some of you, prices have fallen so far you feel you’re close to break-even levels and paying for grain marketing advice now could take you below those levels. This is an understandable reaction. However, this is the time you’re at greatest risk and in need of help — the likelihood of making a mistake, and its consequences, are far greater during market downturns than when markets are good.

Let me explain by drawing an analogy: when you set out on a summertime drive, you may think — do I have a bottle of water or is my air conditioning working? You worry about some pretty minor things as you embark.

Along the way, if you change your plan, the consequences of that detour are pretty insignificant. Even if your car overheats or you get a flat tire, it would be a bit uncomfortable while you wait for a tow truck, but generally the journey is simple, it’s usually desirable, and it’s one you choose to make. This easy and carefree summertime drive is the journey commodity markets have taken us on for the past four years.

With the markets the way they are now, it’s more like embarking on a wintertime journey. As you know, winter driving requires planning ahead, and the likelihood of making an error is greater, and the consequences more serious.

It so happens I’m heading out on the highway shortly. I’ve made sure my survival kit is in order, I’ve checked weather reports and I’m thinking a lot more about my plan. I’m spending more time worrying about some of the details than if this were a summer journey. In the winter you have to be tuned in to what’s going on because things can happen — the road conditions can change in a minute.

Right now, in the canola and wheat markets, we’re at the equivalent stage to winter driving: you are reluctant, you know you have to embark on something, and the indications are you’ll be facing inclement weather as you plant your crops and begin the growing season. Now is the time to be extra vigilant.

Peace of Mind

Why should you pay a grain marketing advisor when there seems to be so many other places your money is needed? First of all, a good advisor will force you to have a grain marketing plan. You and your advisor will craft this plan during a time when emotional biases will not influence your decisions. Then when those stressful moments arise, as they always will, your advisor will keep you true and on task to that plan.

A good advisor is also looking out for you all week long, watching the markets on your behalf. This person alerts you to events you should be paying attention to, whether it’s an opportunity to sell because something favourable has happened in the market or something you should deal with proactively.

Cargill has analysts watching the markets on a macro level, which your advisor translates into your individual market conditions and compares to your needs from a grain marketing perspective. That advisor should also help you determine what the true cost of production is, as opposed to a ballpark figure you may have worked with during favourable market conditions.

Your advisor should be there riding shotgun with you to give you some peace of mind so you don’t have to fret about the markets as you go away on vacation or spend time planning what you’re going to be growing.

Your advisor and the team backing him or her should be watching for those changing conditions, whether they’re in your favour or against you.

How are you navigating today’s markets? I’d love to hear about your efforts. Or contact a Cargill expert today for more information on risk management tools and grain marketing alternatives.

Tags: Cargill Experts, Downside Protection

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