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Be a better grain marketer

It’s more important than ever to be an astute grain marketer. Strengthen your position with these pro tips

Once you have a network of buyers you’d like to do business with, it pays to stay in touch — it will likely improve your chances of being alerted to pricing specials when they come around.

Reg Dyck farmed for more than 40 years near Starbuck, Man., but he knew early on that grain marketing was something he wanted to learn more about. In fact, Dyck was still in high school when he started taking marketing extension courses put on by Manitoba Agriculture and other ag agencies.

“What motivated me, I guess, was obviously you want to be a successful, profitable farmer,” he says.

Now retired from farming, Dyck started teaching a farm business course that’s part of the University of Manitoba’s ag diploma program a few years ago. He says he’s learned quite a bit about, in his words, “tractor seat marketing” over the years, which he shares with his students.

Dyck says back when he was starting out, things were actually pretty simple when it came to marketing grain.

“It used to be (marketing your) wheat was pretty straightforward. You would sell it to the wheat board and get whatever they gave you,” he says.

The Canadian Wheat Board, of course, is no more, and as Dyck tells his students, these days it’s more important than ever to be an astute grain marketer.

We asked Dyck as well as Brian Wittal, general manager of Paterson Grain’s Foothills Terminal in Bowden, Alta., and Neil Blue, a provincial crop market analyst with Alberta Agriculture, to share their tips for farmers on becoming better grain marketers. Here’s what they had to say.

Know your buyers

Grain companies often have different contracts with different pricing strategies they can offer producers, so it can be useful to do a little research to see what’s the best fit for your operation.

Blue advises farmers to look around for the best price, and he says it’s a matter of knowing not just your pricing alternatives, but also the buyers.

“Within Western Canada, there’s a lot of buyers out there to choose from,” he says.

Blue recommends the Canada Grain Commission (CGC) as a good source of information about grain buyers. Farmers can also find out what companies are licensed by the CGC.

Once you have a network of buyers you’d like to do business with, it pays to stay in touch — it will likely improve your chances of being alerted to pricing specials when they come around.

Know your product

Once harvest arrives, it’s important to know what it is you’re selling. Blue notes the CGC offers a quality assessment program for farmers that can help identify what market channels are available to them.

“You can send your product away for a free grade analysis, and that’s a very useful way to find a base grade for your grain,” he says.

“The starting point for that is to take representative samples as you’re binning your grain in the fall,” Blue adds. “When you’re using that base grade, then you can shop around widely with your network of buyers.”

Spread out sales

The best grain marketers don’t expect to hit the jackpot by selling their crops at the market peak, because they know this just isn’t possible.

Blue believes selling everything at once is generally not a good idea. As an example, he says Prairie farmers who sold a large percentage of the recent canola crop early on were likely disappointed with the way things turned out, “because the prices just kept strengthening and strengthening.”

Blue’s advice is to sell in increments over the year, with the goal of getting the best average price for your grain crop. “It’s much better, I think, to sell in stages over a marketing period,” he says.

Spreading out sales also enables farmers to look for good selling opportunities with rising markets, Dyck says. “You reward a bull market, because it (can) turn on a dime and go down.”

Wittal recommends grain producers sell 15 to 25 per cent of their crops after they’re seeded, if conditions look good. This can act as a hedge — in case prices fall, there’s money in the bank to cover some of the farm’s production costs. And, conversely, if prices rise, a majority of the crop is still available to market.

Dyck says it’s important to recognize when marketing grain crops, “there is seasonality most years to pricing.”

Weather-related market rallies can usually be counted on as a good time to sell, he says, noting grain prices will often rally in the January/February period when end users are looking to lock in supply. Dyck maintains selling during a heavy delivery period like harvest time is usually not a good plan most years.

Blue suggests the May/June time frame is often when prices are highest for producers looking to lock in a price for forward contracting. However, he cautions farmers to resist selling too much grain in advance of the crop coming in.

“I imagine there are some farmers that are concerned currently about the level of forward selling they’ve done on new crop canola because of the current heat wave we have and the possibility that yields are being reduced out there,” says Blue.

“We typically recommend no more than 50 per cent of an expected harvested crop to be priced prior to harvest,” he adds. “It’s just a rule of thumb we tend to use.”

Monitor the markets

There are plenty of ways farmers can access market information these days. Multiple market news reports and newsletters are available free of charge or by subscription, and there’s a growing number of apps that make it easier than ever for grain farmers to check spot prices and basis levels.

Supply and demand is a big driver of the grain markets, so keeping tabs on crop conditions and yield numbers, both locally and globally, can help farmers identify market opportunities that may reap the best prices.

Wittal encourages producers to also keep an eye out for developments on the world stage, such as shifts in government policy, trade embargoes or supply chain issues (like the Suez Canal closure) that can affect grain markets.

“There’s always something changing in the markets,” Wittal says. “There’s nothing there you can consistently rely on to be the same from day to day or week to week or month to month or year to year. You’ve got to understand how those different factors at the different levels can influence what may happen with the price (of) your commodities.”

Get help if you need it

Keeping on top of all the daily market information can be overwhelming, so it can be beneficial to reach out to marketing professionals like provincial farm management specialists, cash grain brokers, commodity futures brokers and market analysts for assistance in making informed selling decisions.

As Wittal points out, some farmers are keen to peruse all the market information they can get their hands on and make marketing decisions, but there are lots of others who aren’t.

Wittal was a grain marketing consultant for many years before joining Paterson Grain. You’ll also recognize his name as a former Grainews columnist for many years. One reason he set up his own consulting business was he ran across so many farmers who were looking for help. Farmers wanted someone who could tell them what was going on in the markets, identify overall trends and even help map out a marketing strategy, rather than trying to do it themselves.

“Guys were saying, ‘I don’t have the time to be able to do all of this stuff,’” he says. “I need somebody who has that expertise to advise me on this, to help me make better decisions,” says Wittal. “Everybody’s got to determine how deep into the pool they want to step. Each farm has to look at that and decide what is their capacity for being able to do this.”

Wittal says if it’s a family farm and there is someone willing to take the lead on grain marketing and learn as much as they can about it, that’s great. But if there isn’t anybody willing to take on that role, your best bet might be to seek out a professional and outsource marketing, much the same way an accountant can take care of your books.

Dyck says he asks his students if you’re going to hire somebody to give you marketing advice, how do you know they’re giving you good advice? He believes in order to know that, you must have the basic concepts down, and know enough about marketing to recognize what a good basis level is and so on.

Have a sounding board

Blue believes when you’re making marketing decisions, it can be helpful to have others around you who you can discuss your ideas with — be it a spouse, business partner, marketing consultant, or even a neighbour. “It’s a good idea to have a sounding board of some kind,” he says.

If you have a circle of farmer friends that gets together regularly, perhaps as a marketing club or even just for coffee, this can be a good place to get marketing advice, Dyck offers.

“Not to say that they’re always going to be right, but I have one neighbour who says, ‘Always look at your successful neighbours and see what they’re doing,’” he says. “You don’t want to look at the pessimist, or the neighbours that may be struggling.”

About the author

Associate Editor

Mark Halsall

Mark Halsall is an associate editor at Grainews based in Winnipeg. Contact him at [email protected]

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