Grain Marketing 101

Hi there, I’ve got a quick update for you.

After writing this newsletter for a while, I’ve realized something: agriculture is complicated. From food production to farm economics, it can be overwhelming—even for people working in it, let alone newcomers.

That’s why I’m shifting the focus.

Instead of just breaking down ag business topics, I’m going to start explaining food, farming, and the ag economy in simple terms—clear, honest, no fluff.

To reflect this change, I’m also rebranding the newsletter. What used to be called Ag Breakdowns is now called Ag Made Simple. I love the new name because it reflects what I’m really trying to do: make sense of agriculture, without the jargon.

If there’s anything you find confusing about ag, whether it’s a big-picture topic or something small, hit reply and let me know. I’d love to cover it in a future issue.

Today’s topic?

What the heck is grain marketing?

Let’s dive in.

As always, if you have any feedback, let me know Here.

You’ve spent all year growing that beautiful field of corn. You worked your tail off. The sun shone, the rain fell, and now you've got a mountain of golden kernels. That's the farming part – the production.

But, having a mountain of corn in your barn doesn't put food on your table.

That’s where grain marketing comes in – selling smart. 

It's not about being a slick salesperson, but about making smart, informed decisions. Because if you just sell your corn whenever, to whoever, for whatever price they offer, you're essentially leaving money on the table. And in farming, every penny counts.

Don't be a price taker!

Let’s Imagine you are a baker, and you've baked a hundred loaves of your famous, delicious sourdough bread. You could just stand by the road and let people offer you whatever they feel like, right? 

"$2 a loaf!" 

"$1.50!" 

That's being a price taker. You're at the mercy of others.

Grain marketing is about trying to be a price maker, or at least a price influencer. It's about figuring out the best time, place, and way to sell those loaves so you get a fair shake, or even better, a great deal.

Why is this so important? you may ask.

Because the price of corn, unlike your sourdough, jumps around like a kangaroo on a trampoline. One day it's up, the next it's down. 

Why? Because of a million things:

• Did it rain too much in Iowa?

• Did China buy a bunch more?

• Did some new biofuel plant open up?

All these things can shift the price. If you don't pay attention, you could sell your hard-earned corn on a "down" day and kick yourself later. 

Grain marketing is your plan to avoid those kicks.

The absolute first thing: Know your bottom line

Before you even think about selling, you've got to know this: How much did it cost you to grow that corn?

Think about your sourdough again. You know how much the flour, water, salt, yeast, and electricity for the oven cost, right? If you sell a loaf for less than that, you're losing money on every single one!

It's the same with corn. You add up all the costs like: the seeds, the fertilizer, the tractor fuel, the rent for the land, even your own time. 

That total number, divided by how much corn you grew, gives you your cost of production per bushel.

That's your break-even point. Anything below that price, and you're in the red. Anything above it, you're making a profit. Simple as that. You have to know this number.

Your grain selling toolbox

Alright, you've got your corn, and you know your cost of production. Now, how do you actually sell it to maximize your profit? Smart farmers use a mix of strategies. Think of them as different tools in your marketing toolbox:

1. The "sell it now" tool (Cash sale):

This is the simplest. You drive your truck full of corn to the local grain elevator (a big warehouse that buys grain). They tell you, "We'll give you $4.50 a bushel today." You say "Okay!" and they pay you.

Good for: when you need money right away, or if the price today is really good.

Bad for: If the price goes way up next week, you've missed out. You just took whatever they offered.

2. The "promise to sell later" tool (Forward contract):

Imagine a restaurant calls you in June, when your corn is still growing, and says, "Hey, we'll buy 10,000 bushels of your corn in October for $5.00 a bushel." If you agree, you've just forward contracted a portion of your harvest.

Good for: Locking in a good price before harvest. It gives you peace of mind and helps you budget. You know what you're getting.

Bad for: If the price jumps to $6.00 a bushel by October, you're stuck at $5.00. You've traded potential upside for certainty.

3. The "store it and wait" tool (Storage and delayed pricing):

Instead of selling immediately after harvest, you store your grain in huge bins on your farm or pay the elevator to store it for you. You're betting that the price will go up later in the year, maybe in winter or spring, when there's less fresh corn around.

Good for: Potentially capitalize on higher prices throughout the year

Bad for: Storage costs money! And what if the price doesn't go up? What if it goes down? Now you've paid to store corn that's worth less.

4. The "price insurance" tool (Futures and options - A bit more advanced):

This is where it gets a little trickier, but it's super powerful. Think of it like buying insurance for the price of your corn.

Futures: Imagine you want to agree on a price for your corn today, even though you won't sell it until later. Futures let you make a deal on a market to lock in that future price. This helps protect you if the market price falls later on, giving you more certainty about what you'll earn.

Options: Options are like buying a special kind of price insurance. You pay a small fee (called a "premium," similar to car insurance). This fee gives you the choice to sell your corn at a specific minimum price. If the market price goes down, your option protects you by letting you sell at that higher price. But if the market price goes up, you simply don't use the option and sell your corn at the better market price, only losing the small fee you paid.

Good for: Seriously managing risk and allowing you to participate in rising markets while still protecting yourself from big drops.

Bad for: It costs money (fees), and you need to understand how it works. Don't just jump in without learning!

Why prices go bonkers

So, why does the price of corn jump around like a kangaroo on a trampoline? It's like the weather, a million things cause it:

• Supply and demand 
  The fundamental force. Huge harvests (high supply) drive prices down; droughts (low supply) drive them up. Demand changes too – more meat consumption means more corn for feed.

• Weather 
  A drought in Kansas or too much rain in Brazil can instantly change global supply expectations. Prices react fast!

• World events 
  A trade war with China, a conflict in Ukraine – these things disrupt how grain moves around the world.

• The dollar 
  If the U.S. dollar gets stronger, American corn becomes more expensive for other countries to buy, which can slow down sales.

• People betting
  Believe it or not, some people just bet on prices going up or down. They don't actually grow corn, but their buying and selling can influence the market.

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Your grain marketing plan: Your selling blueprint

The best farmers don't just wing it. They have a plan, just like you have a recipe for your sourdough.

1. Know your costs (again!): You've already figured out your break-even. Keep that number front and center.

2. Set price targets: Don't just hope for a good price. Decide beforehand: "If corn hits $5.50, I'm selling 20% of my crop. If it hits $6.00, I'm selling another 30%." You're building a ladder of prices you're happy with.

3. Spread out your sales: Don't sell all your corn on one day. Use a mix of those tools we talked about. Sell some in June, some in October, some in January. This way, you don't put all your eggs in one volatile basket.

4. Listen, learn, adjust: Pay attention to the news. Read the reports about crops around the world. The market is always changing, so your plan needs to be flexible. You wouldn't stick to a sourdough recipe if your starter died, right? You'd adjust!

The takeaway: Control what you can

Farmers can't control the weather. They can't control what politicians do. They can't control how much corn other farmers plant. But they can control how they sell their corn.

You worked all year to grow it. Grain marketing makes sure you get paid what it’s worth. Don’t leave it to chance.

 THINGS I’M READING

(A list of things I bookmarked instead of doomscrolling)

• Australian farmland prices hit new highs amid strong demand

• How Latin America is moving from a pioneer to a powerhouse in agricultural biologicals

• The seed oils at the center of heated online debates

• The business of animal cloning

• More than one option

• Humans can (sort of) spontaneously combust

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