Market Overview

Turbulent Situation for Grain Marketing

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Bloomington, ILL, July 30, 2018 (GLOBE NEWSWIRE) -- Could the grain marketing landscape for the 2018 corn and soybean crop be any more intimidating than it currently is and promises to be for the remainder of the year? Probably not.

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                 Farm income is down 50 percent over the past five years. Argentina soybeans experienced a drought. Brazil's safrinha corn crop also had issues with dryness. President Trump's trade war with China does not bode well for commodity prices that, in some cases, are too low to cover production expenses. Good growing conditions for U.S. crops have led to big price breaks. Money for farm loans is very tight and hard to come by.

               "The best way to manage this type of market chaos is to tune out most of the noise you hear and read, regardless of its origin,' says Dave Fogel, vice president and director of farmer marketing for Advance Trading, Inc. (ATI) in Bloomington, Ill. "You simply can't rely on what, in most cases, are someone else's opinions about what the market and prices will or will not do."

               ATI is an organization of grain traders and brokers with 22 offices spread across Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota and Tennessee. In addition to these specific office locations, ATI services farmers everywhere via personal, on-farm visits. The company has over 30 years of experience in developing risk-management strategies for farmers, grain elevators, warehouses, processors and end users.

               Fogel adds that skillful and profitable sales of your grain take on a whole new importance in turbulent market conditions like we have at present. "Marketing can make the biggest difference in whether an operation is profitable or not than any other action the farmer can take," he emphasizes.

              Getting a handle on what Fogel calls the "emotional quotient" as it relates to tuning out marketing noise is of supreme importance. "Emotions are a huge piece of the marketing puzzle and should be managed accordingly," he explains. "Farmers love to hear what someone else thinks is going to happen with commodity prices and where the market might be going. And, farmers like to hear what they want to hear. That, of course, is human nature, but you just can't rely on other peoples' guesses."

               Unfortunately, the rougher the farm economy, the higher the level of noise that farmers are subjected to. "The noise right now is at a crescendo, whether it be from agricultural print and broadcast media, the general consumer press, government officials or agencies. Social media further exasperates the problem because it gives a lot of unqualified people a voice that travels loudly and quickly."

               Fogel says that ATI works with farmers to better tune out the noise, and that the company's longest running – and most successful – farmer clients have learned to lower the noise volume if not tune it out completely. "As a firm, our advisors at ATI actually like it when grain markets are especially challenging and complicated," he adds. "We are already prepared and ready for it."

               Besides managing and tuning out the market noise, Fogel offers the following additional tips for effective grain marketing:

  • Hedging grain might offer the greatest opportunity for profit under the current marketing situation.
  • If you are not hedging, then you are guessing.
  • Don't try to predict grain prices or listen to someone who does. It never works.
  • The worst thing a farmer can do is ignore or neglect market opportunities because he is tied up with field work.
  •  Playing the futures market is easy and free to get into but often costly to get out of.
  • Make an honest attempt to become more knowledgeable about the art and science of grain marketing. It's a subject that intimidates a lot of farmers, but it can be taught and learned.
  • Consider use of a professional grain marketing firm such as ATI. Interestingly, only about 5 to 10 percent of farmers do so. ATI commodity risk management consultants will come to your farm to provide education and guidance for improvement of grain-marketing efforts.
  • Grain marketing is a full-time job in order to be profitable. You already have one full-time job. Can you handle two?
  • With professional guidance, there are ways to market your grain that allow you to be wrong but still be right.

Granted, tuning out market noise is easier said than done for many farmers. But finding a way to accomplish this goal in order to make more aggressive and profitable marketing decisions can pay handsome dividends. "It's all a matter of self discipline," Fogel emphasizes. "You have to determine what information you can trust and completely tune out all the background noise comprised solely of opinions and guesses."

About Advance Trading, Inc.

               Advance Trading, Inc. is an organization of grain traders and brokers who specialize in providing personalized protection and risk management strategies for producers, grain elevators, warehouses, processors and end users who produce, sell, purchase, handle and process agricultural commodities. The company has thousands of clients throughout North America and around the world, as well as 22 offices spread across the Midwest to service U.S. farmers. ATI serves as an independent source of unbiased factual information pertaining to the grain, feed and livestock industry. The company is a strong believer in hedging grain to profit from changes in basis and spreads, as well as managing input and output price risk management to maintain and improve margins. ATI utilizes an extensive knowledge of transportation systems and an understanding of the link between futures market values and cash grain values to determine the best times to move and purchase grain. For more information on ATI go to www.advance-trading.com.                     

Cat Weldt
Advance Trading Inc.
3096642386
cweldt@advance-trading.com

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