As grain harvest season is in full swing currently in Australia, it is easy to overlook your grain marketing plans, in favour of focusing all your time and attention on actually harvesting the commodity from the paddock.
But whilst as a grain grower, you may be time poor currently, there is no better time than to consolidate and lock in your grain marketing plans for the future, so as to have something to work towards following harvest season.
As experienced grain marketing experts, the dedicated and professional team at Grainwise have put together their top grain marketing tips for your harvest.
What is grain marketing?
Not so much a grain marketing tip as such, but something that is essential to understand is what grain marketing actually is. Grain growers, naturally understand what grain marketing involves, but for those new to the industry, the concept of grain marketing can be quite foreign.
Essentially, the concept of grain marketing is the process of converting grain into money. It involves a series of decisions, the development of strategies, focused upon pricing.
For many farmers grain marketing is the most complex and hardest part of their farming enterprises and as farmers tend to focus these days more on the actual production and harvesting of grain, it has become increasingly popular for grain growers to utilise the services of a reputable grain market company, such as Grainwise, to navigate the grain trade market on their behalf.
The grain marketing process is based upon the futures market and futures contracts, which are legal documents that establish an amount of grain at a cost per bushel, with a delivery date that is in the future. Grain traders then use these contracts as a way to minimise their risk within the market. Traders, both buy and sell futures contracts. In terms of risk, the grain trade market is firmly based upon the principles of supply and demand, meaning that the trends and cycles are somewhat predictable, however things like adverse weather events, large storms for examples or significant increases or decreases to rainfall and temperatures can have a significant impact upon the market.
Top 5 grain marketing tips
With a comprehensive understanding of grain market basics, it is far easier to implement our top 5 grain market tips into your harvest and future harvest plans.
Knowledge is power – read up and stay informed.
In order to make the best decisions relating to your grain, futures contracts, and your grain trading options, it is always best to stay up to date on the current market trends with premium market information. Staying well informed means that you are not just winging it, and making decisions off hand, but are utilising accurate information to consistently plan and strategize ensuring you receive the best prices available for your product.
Consider the costs – Grain Logistics
Making yourself aware of your logistics costs, can ensure that you make sound grain marketing decisions. Particularly if you are a grain grower, who does not have storage and transport facilities of your own, the prices you pay to contractors need to be considered as part of your grain marketing strategy. There is little point entering into a contract, only to realise down the track that after your grain logistics and storage costs you are left far shorter in terms of cash flow than you anticipated.
Greed has no place in Grain Contract Negotiations
As with everything in life, get too greedy and things can all come crashing down very quickly! Focus on obtaining a great price during the contract negotiation phase. A price where you can make a decent profit, whilst keeping a level head and not pushing too far, holding out fanciful hope that the grain price will increase even further. You may be right and grain prices may in fact rise, but there is a possibility you could be wrong, and therefore loose out whilst trying to push for something that isn’t feasible.
Look to the future – take advantage of futures contracts
If you are looking to increase profitability, it is certainly worth considering futures contracts as a method to sell your grain. Futures contract or forward contracts are one of the least utilised grain marketing strategies, yet they can yield the best results.
A futures contract, as the name suggests, looks to the future, and enables a grain grower to sell to a buyer before it has been harvested. The beauty of futures contracts is that you can lock in a solid price when the market is operating at a high, rather than risking it and waiting until the harvest season to see what the price is at that time.
Whilst it is always important to exercise caution when considering futures contracts, particularly in the harsh Australian climate where drought is common, futures contracts can be a fantastic grain marketing tool for your business.
Remove emotion from the process
For grain growers, grain farming is everything. For many the labour of love on the land has spanned many generations, and for others it is literally their life, so emotion is certainly a factor when it comes to grain marketing, however it shouldn’t be.
Passion is great when use in the right way, but if you emotionally engage in negotiations or enter into contracts because you are upset that you missed out ton the high grain prices of the previous week, so you are taking what you can get at the present time, things are not going to work for you. Make sound, decisions, leave emotion behind and focus on the knowledge and evidence before you.
The team at Grainwise have over 14 years’ experience in Grain marketing, and we certainly hope that our tips and tricks above provide some valuable guidance for those struggling to navigate the grain market.
Growing quality grain takes a lot of work and we understand that time is precious, particularly for grain producers, which is why we offer a comprehensive grain marketing service, assisting grain producers to obtain the best rates and maintain high levels of profitability for their grain harvest.
At Grainwise, we don’t believe there’s a one-size fits all approach to grain marketing, which ensures a truly individualised strategy that is best suited to your business. Whether you grow wheat, barley, canola, or lentils, our team brings a deep market knowledge that helps you maximise profitability. Let our dedicated and highly experienced team focus upon the grain marketing, while you concentrate on what you do best, producing a superior quality product.
Give the team at Grainwise a call for the most current market information and have a discussion with the local grain marketing experts. Contact Us Today!