1. Assistant Professor/Grain Markets Specialist
ECON 338C:
Topics in Grain Marketing
Chad Hart
Assistant Professor/Grain Markets Specialist 1

2. Today’s Topic Reminder on Marketing Assignment, Marketing Plans,
Final Exam, & Course Evaluations

3. Prices
Price spreadsheet due today (you can either give me a printout or me the file)
Marketing write-up due next week (May 7th)

4. Fear, Greed, and Ego Fear of making a bad decision
-- Watching prices slip away as you wait
Greed of expecting even higher prices
-- Not taking advantage of good price opportunities
Ego of wanting to claim you caught the market high
-- “Lake Wobegon” marketing

5. Ego
New generation contracts are one way to remove emotion from marketing
Greed
Fear

6. Changes in Price Volatility
Source: Zulauf and Roberts, Ohio State

7. Historical Soybean Volatility Changes
Source: Zulauf and Roberts, Ohio State

8. Overall Shift
Source: Zulauf and Roberts, Ohio State

9. Source: Zulauf and Roberts, Ohio State

10. Source: Zulauf and Roberts, Ohio State

11. Source: Zulauf and Roberts, Ohio State

12. Source: Zulauf and Roberts, Ohio State

13. Factors Leading to Higher Commodity Prices
Source: USDA-ERS, Trostle, July 2008

14. Ammonia Prices Source: http://www.fertilizerworks.com/html/market/
TheMarket.pdf

15. Marketing Plan
To avoid fear, greed, and ego dominating your marketing, have a plan and stick to it.
A marketing plan outlines your market strategy and your marketing objectives.
It should examine marketing opportunities before and after harvest.

16. Marketing Objectives Get the highest selling price Reduce price risk
Pretty tough to do
More realistic objective: Obtain better than average prices
Reduce price risk
Cover cash flow needs
Minimize tax liability
Look at short and long-term goals for your business

17. Building a Marketing Plan
5 basic steps:
Estimate number of bushels to sell
Calculate breakeven price
Project price and yield scenarios
Compare pricing tools and analyze market opportunities
Develop a pricing plan

18. Bushels to Sell Breakeven Costs What’s your expected production?
What do you have in storage?
What about on-farm use?
Breakeven Costs
What are your production costs?
What are your storage costs?
On-farm vs. off-farm?
What are your cash flow needs?

19. Tools and Opportunities
Scenarios
Seasonal price trends
Weather outlook
Export picture
Livestock outlook
Tools and Opportunities
Market tools: Futures, options, forward contracts
Government tools: Crop insurance, marketing loans, CCP/ACRE

20. Tentative Pricing Plan
Outline realistic pricing targets
Have periodic price targets and quantities to sell
Have patience and be willing to reevaluate price goals
Remember it’s hard to lose money when making a profit

24. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

25. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

26. Another Template Source: O’Brien, Grain Marketing Plans for Farmers,
Kansas State University, July 2000

27. Some Examples University of Nebraska:
“Achieving Success with a Business Plan: Case Study to Prepare a Grain Farm Business Plan (CC424)
University of Missouri:
Purdue University:
AgRisk website:

28. Decision Trees
Source: Usset, U. of Minnesota

29. Decision Trees
Source: Wisner, Iowa State University

30. Final
Take home, due May 7
If I’m not in the office, slide it under my door
I’ll post the grades on the class website by May 12 (Tuesday)

31. Class web site: http://www. econ. iastate
Class web site: Have a great summer!