MARKETING in 2000 + Marketing Tools & Strategies Dennis Schroeder Marshall Farm & Agribusiness Management

Marketing tools for today’s farmer MARKETING in 2000 + Marketing tools for today’s farmer Cash contracts Forward cash contract Delayed price contracts Govt. programs Future fixed contract

Marketing tools (continued) MARKETING in 2000 + Marketing tools (continued) Hedging with futures Hedging with call options Hedging with put option Basis fixed contract Others

Marketing tools for today’s Farmer MARKETING in 2000 + Marketing tools for today’s Farmer Note: Marketing in 2000 + Unit 2 will discuss the advantages & disadvantages of each marketing tool along with examples on how they are calculated.

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Futures-Up Basic Strengthen Expected Change Basic Weaken Futures-Down

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Condition: Expecting higher futures and stronger basis Futures-Up Expected Change Basic Strengthen

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Market Strategy Store Grain Delayed Price Contract Futures-Up Expected Change Basic Strengthen

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Condition: Expecting higher futures and weakening basis Futures-Up Expected Change Basic Weaken

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Market Strategy: Basis Fixed Contract Sell Cash / Buy Call Sell Cash / Buy Futures Futures-Up Expected Change Basic Weaken

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Expected Change Basic Weaken Condition: Expect weakening basis and lower futures Futures-Down

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Expected Change Basic Weaken Market Strategy: Sell Cash Forward Contract Futures-Down

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Expected Change Basic Strengthen Condition: Expect strengthening basis and lower futures Futures-Down

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Expected Change Basic Strengthen Market Strategy: Sell Futures Buy a Put Option Sell Futures / Buy a Call Futures-Down

Marketing Strategies Selection Guide MARKETING in 2000 + Marketing Strategies Selection Guide Market Strategy Basis fixed contract Sell cash, buy call Sell cash, buy futures Market Strategy Store grain Delayed price contract Futures-Up Expected Change Basic Strengthen Basic Weaken Market Strategy Sell futures Buy a put option Sell futures, buy call Market Strategy Sell cash Forward contract Futures-Down

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Purpose: To identify the price required to cover interest and storage costs over variable period of time.

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Step 1: Select current price $ / Bu. from left column $ / Bu. Code Mo. 2 Mo. 4 Mo. 6 Mo. 8 A 7.18 7.35 7.53 7.71 $7.00 B 7.12 7.23 7.47 6.67 6.84 7.01 7.17 $6.50 6.61 6.72 6.83 6.93

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Step 2: Select row A or B Note: Code A = + Interest & Storage Code B = + interest only $ / Bu. Code Mo. 2 Mo. 4 Mo. 6 Mo. 8 A 7.18 7.35 7.53 7.71 $7.00 B 7.12 7.23 7.47 6.67 6.84 7.01 7.17 $6.50 6.61 6.72 6.83 6.93

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Step 3: Move to the right to determine new price required to cover interest & storage costs for given number of months. $ / Bu. Code Mo. 2 Mo. 4 Mo. 6 Mo. 8 A 7.18 7.35 7.53 7.71 $7.00 B 7.12 7.23 7.47 6.67 6.84 7.01 7.17 $6.50 6.61 6.72 6.83 6.93

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Test Yourself Identify price required to cover interest and storage for the following situations: Price = $5.50 Code A 8 Months

Storage & Interest Charts Test Yourself Price = $5.50 Code A 8 Months MARKETING in 2000 + Storage & Interest Charts Test Yourself Price = $5.50 Code A 8 Months

Storage & Interest Charts Test Yourself Price = $5.50 Code A 8 Months MARKETING in 2000 + Storage & Interest Charts Test Yourself Price = $5.50 Code A 8 Months Answer = $6.11

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Test Yourself #2 Identify price required to cover interest and storage for the following situations: Price = $1.80 Code A 10 Months

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Test Yourself #2 Price = $1.80 Code A 10 Months

Storage & Interest Charts MARKETING in 2000 + Storage & Interest Charts Test Yourself #2 Price = $1.80 Code A 10 Months Answer = $2.25

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Purpose: To set marketing plan to activate the sale of a commodity with a target date or a target up or down price.

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Market transaction activated by either: Target date has arrived Target up or target down price is met

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Target 2 1. Advance to Target 2 2. Enter Quantity and new Target Date

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Target 2 3. Enter $ Change 4. Enter current target price as New Price

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Target 2 5. Calculate and enter new target UP and target DOWN prices.

Target Up / Target Down Marketing Plan MARKETING in 2000 + Target Up / Target Down Marketing Plan Results: The target up / target down process will help you plan your sales and avoid missing price movements that would be acceptable in your marketing plan.

Use these tools in marketing your commodities. MARKETING in 2000 + Download and Print When finished with this presentation, return to the course menu, load and print a copy of the Marketing Strategies Selection Guide, the Storage & Interest Charts, and the Target Up / Target Down Marketing Strategy. Use these tools in marketing your commodities.

3 Rules of Marketing Keep Good Records MARKETING in 2000 + 3 Rules of Marketing Keep Good Records Know your costs and determine your profit margins.

3 Rules of Marketing 2. Take Profits MARKETING in 2000 + 3 Rules of Marketing 2. Take Profits When you can price at a profit, do so.

3 Rules of Marketing 3. Bet the odds MARKETING in 2000 + 3 Rules of Marketing 3. Bet the odds Use historical data, seasonal trends, and the fundamentals.

Develop Written Marketing Plan MARKETING in 2000 + Develop Written Marketing Plan To be covered in Units 2 & 3.

Marshall Farm Business Management MARKETING in 2000 + Dennis Schroeder Marshall Farm Business Management 401 South Saratoga St. Marshall, MN 56258 (507) 532-0006 Phone & Fax dschroed@starpoint.net

Return to checklist for next activity. MARKETING in 2000 + Farm Business Management KEYS to SUCCESS Return to checklist for next activity.