DEVELOPING A MARKETING PLAN. What is the basic information you need to develop a marketing plan? l...
Transcript of DEVELOPING A MARKETING PLAN. What is the basic information you need to develop a marketing plan? l...
What is the basic information you need to develop a
marketing plan?
Determine the amounts of grain to sell
Determine the marketing tools you want to use
Determine when to sell Form a realistic price goal
When should I Sell?
We have two years to sell a crop. • Expand your window• Spread your risk• Sell in smaller increments
Recently best prices have occurred in fall prior to planting.
Storage Season• manage inventory--basis• maximize returns to storage
Planning Season• winter months
Selling Season• Months of Mar. Apr. May and June
SELLING SEASONSACCORDING TO ROACH
Pre-Plant• Recommended 10 to 20% of Crop
Growing• Recommended 10 to 20% of Crop• summer weather market
Harvest• Recommended 10 to 20% of Crop
Storage
SELLING SEASONSBY COUNTRY HEDGING
Deadlines
March 31 for pre-plant season• Planting intentions report
June 30 for growing season• Crop size generally known
Same dates apply for stored crop--all sold by June 30
YOU MUST SELL BY YOUR DEADLINE
What tools do I use?
Cash Sales Forward Cash Contracts Basis Fixing Contracts Hedge-to-Arrive Minimum Price Contracts
Elevator or grain merchant
What tools do I use?
Sell Futures Contracts Buy Put Options
• Fence Buy Futures Contracts Buy Call Options
• Sell and buy a call Combinations with Cash
Futures and Options
How well equipped is your tool box?
The more tools available the easier it is to meet your marketing goals
The added tools give you added flexibility
Learn about the tools and how they work
Basis your market indicator
Know what the normal basis is• Know the seasonal patterns
Tells us what tools to use Tells us if it will be profitable to
store Can be used to time sales Used to indicate market conditions
REALISTIC PRICE GOALS
Start with your cost of production plus a profit
Look to USDA projections Look at Carry Over numbers and % of
annual needs Look at retracements look at market newsletter projections
for various crop sizes
Retracements
Difference between high and low = $0.941
1/3 Retracement (.941 / 3) +$1.854)=
1/2 Retracement (.941 /2) + $1.854)=
2/3 Retracement (.941 /3) X 2) +$1.854)=
$2.17
$2.32
$2.48