hedge about the same percent- levels. Farmers who made sales early age of your crops ahead of harvest to secure their family’s welfare then each year during the Selling Season. found that they’d left a lot of money
The amount of your crop sold on the table when prices rallied. ahead should at least equal the bush- After making additional sales and els you don’t want to store. Failure seeing prices move higher again, to sell enough during the Selling many farmers were psychologically Season often will result in sales dur- unable to get all planned sales made
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ing the fall, which are usually the and all their planned puts bought.
lowest priced months of the year. Sometimes this was a result of crop
Since you will likely never want to losses on the farm. More often it was
sell all your crop by early July, there the fear of making a mistake that
will be bushels that are at price risk kept farmers from making the last
from July until harvest. Plain vanilla round or two of sales.
put options should be purchased We noticed a substantial differ-
to protect the price of the unsold ence again this year in how a small
bushels from the normal price drop percentage of top farmers handled
from spring until fall. We buy one the markets. Not only did they get
fourth of the total number of puts all the sales made that they planned,
you need on each Sell Signal. but also they added more sales and
This year some of our customers puts in late June. They sold a greater
bought the first and second round percentage of their crops than ever
of puts, but they got scared out of before and owned more puts than
their plan on the third or fourth Sell they had ever owned. Farm profits
Signals. Marketing, however, is a lot were so large they ignored all the
like production; you can’t do half predictions of higher prices and kept
the job and expect the best results. selling. If you were able to do that in
Failing to fully implement their 2008, then congratulate yourself.
marketing plan cost farmers a lot of
money in 2008.
Because sales made early in 2008
were cheap compared to the high
Because we deal with so many prices in late June, many farmers
farmers, we have the opportunity to may be tempted to wait until June to
see patterns of marketing decisions. sell in 2009. I believe that would be
In 2007 and again in 2008, most a mistake. The fight for acreage and
farmers sold a larger percentage of concerns about planting a good crop
their crops unusually early because on time likely will give us strong
profits were far beyond record
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