C26—Lancaster Finning, Saturday, September 6,1980 How to make smart grain marketing decisions NEWARK, Del. - You can’t sell a crop profitably without spending time and effort on the process. And this is a year-round job. A farmer who waits until the last minute to sell his gram is simply dumping it, not marketing it, says University of Delaware extension crops marketing specialist Carl German. To get top return on the crops you grow requires the same kind of careful thought you bring to any part of your farm enterprise. Every day there are marketing decisions to be made: Where and to whom will you sell? Should you sell cash or futures? Store or sell? Forward price or hedge? When should you sell? What crops should you ex pand and which ones cut back on? What’s the best way to deal with your interest costs? And how can you deal with the tax consequences of your farm operation? Developing a good market sense may well cost you some money in the “school of hard knocks” at first, says German. But the process is not unlike learning to run any other part of your business. By evaluating the restuls of each marketing year, you can make im provements in the next. It’s never too late to begin developing some sound concepts and marketing skills. With all the un certainties surrounding the 1980 com and soybean crops, the sooner you start developing a realistic marketing strategy, the better. Before you make any decisions, take a look at your options. Which will come closest to covering your costs of production and bring the desired return to management and profit? Your alternatives mclude (1) selling cash at harvest or storing and selling later for cash; (2) forward pricing (hedging) on the futures market for sale at harvest or some later date; or (3) forward contracting in the FISHER AND STOLTZFUS TRAILER SALES Call 717-768-3832 between 7 a.m. & 9 a.m. or call 717-354-0723 after 6 p.m. East of New Holland, Pa. Check Our Prices Before You Buy, We Have All Types Of Trailers. Wi 16’ long by 8' wide body has 40" sides, a grain door in rear, flotation tires for field work or 10,000 lbs., axles with dual wheels, electric hoist carrying capacity 300-350 bu. cash market-priced or unpriced-for sale at harvest or sometime later. Each method has advantages as well as pitfalls. With a forward cash contract you can sell gram pnced for delivery at a specified tune, or you can sell it unpriced. Selling unpriced grain generally involves signing a contract for fi ture delivery at a price so many cents over the cash price or under futures. Selling grain unpriced is usually done when you, the seller, expect a price in crease to occur between the time the contract is written and the future delivery date when the transaction ac tually takes place. Terms for unpriced contracting vary between local elevators and brokerage houses, so discuss specific terms with your elevator manager or account executive. Stored grain is often unpriced for future delivery in a specified month. The seller may agree to pay drying and storage charges up to a certain date. The object of storing gram for later sale is to take ad vantage of any price in creases that may occur. RO FING & SIDING ★ GALVANIZED PLAIN and GALVANIZED PAINTED ROOFING & SIDING ★ SPOUTING ★ iv 2” SUPRATHANE INSULATION ★ 3%” FIBERGLASS IN ROLLS ★ BLOWN IN INSULATION FOR CEILINGS JOHN M. ESH RD #2 East Earl, PA 17519 Phone-717-354-7561 Rt. 322 & Fetterville Road The object of hedging the stored grain is to protect yourself from adverse price changes. Generally for ward contracting cash priced gram or hedging m the futures market is done when a price decline is ex pected. It only pays to place a hedge in futures if local basis, cash, and futures price movements are favorable in your particular location. The alternative to either forward cash contracting or hedging is to sell strictly in the cash market. This doesn’t afford you any price protection, however. Instead of averting price risk as oik, does with forward con tracting, you simply become a risk taker. Which of these three alternatives you choose will depend on your pricing objectives, liquidity and the amount of risk you are willing to accept in marketing your crop. Some farmers find a combination of approaches most profitable. In considering forward contracting vs. cash sales, there’s no general rule as to how much your crop to sell Standard Livestock trailer with metal top sleeper van. Comes in 16,20,24,28 ft. lengths, brakes on all wheels. at any time. Different consultants have different opinions. It does make a lot of sense, however, to do your marketing over the course of a year, rather than all at once. This mcreases the probability of your receivmg a higher average price, explams the specialist. How much you contract for or hedge at a particular time is an individual decision which should be based on the condition of your crop, your financial n,i„n and joui ability to bear risk. ill ALPINE hf PLANT FOOD OFFERS ATOP QUALITY LIQUID PLANT FOOD AT ROCK BOTTOM PRICES. ★ Alpine minimizes expensive handling costs by utilizing farmer distributors. ★ Alpine eliminates expensive computer billing costs with cash accounts. ★ Alpine uses food grade ingredients for maximum avail ability and safety to plants. ★ Alpine in a neutral PH chlorine free plant food that will not rust equipment, freeze or settle out. ★ Alpine will guarantee the following prices for orders re ceived until Sept. 30,1980 for delivery and payment by: Nov. 30. $2.60 Jan. 31 $2.70 Mar. 31.1. $2.80 Dec. 31 $2.65 Feb. 28 $2.75 Apr. 30 $2.90 Pennsylvania Distributors HAROLD WOLF GARY REPLOGLE JAMES LANDIS Centre Hall Bedford East Greenville 814-364-1349 814-847-2851 215-679-2682 CLYDE BARTHOLOMEW RICHARD WILSON Orangeville Stewartstown 717-784-1779 717-993-6101 Sheriff Joe is right No confine ment building or farm is safe without these advanced farm monitoring systems They warn against power failure, fan failure, temperature extremes, FARMER BOY PRODUCTS 457 E Mam Ave Myerstown, Pa 17067 717-866 5692 THOMAS FARM SYSTEMS, INC. 2025 Horseshoe Rd Lancaster, Pa 17601 717-299-1706 CUMMINGS & 6RICKER Batavia NY 716 343 5411 Forward contracting m the cash or futures markets does have some pitfalls, but most of these can be avoided, says German. Some of the most serious are: leaving marketing decisions until the last minute; overcontracting; failing to understand the terms of the contract; letting someone else make your marketing decisions for you; failing to compute a target price; and locking m a loss. Leaving marketing decisions until the last minute: If you want to do a good job of marketing, start unauthorized entry, fire and theft Even alert you when strangers approach your farmstead Better safe than sorry Stop in and see us for full details Available From: S & S DISTRIBUTORS Box 68 Schickshinny, Pa 18655 CREUTZBURG, INC. Lincoln Hwy East Box 7 Paradise, Pa 17562 717 768 7181 CUMMINGS &BRICKER Carlisle PA 717 249 6720 planning your strategies a year in advance. It may be wise to consider spreading sales over the course of a year. Leaving them until the last minute is often the most costly mistake you can make. For example, if you need storage space in a given year and haven’t made arrangements prior to harvesting, you could well end up dumping your crop on the cash market, regardless of the price at harvest. Overcontracting product ion; You may have to buy (Turn to Page C 27) UMBERGER’S MILL Fontana, Pa 17042 717-867-5161 LONGACRE ELECTRICAL SERVICES, INC. 602 Main St Bally, Pa 19503 215-845 2261 AGWAY, INC. Stores
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