County Agent News

Dan Folske

March 28, 2011

    Marketing Plans And Market Strategies 

       There are many crop marketing tools available for producers to maximize return under a wide variety for market conditions. Selecting the right tool can seem as confusing as guessing which way the market will move. For crops like spring wheat which is strongly linked to the futures market producers need to consider both the futures market and the local Basis. John Ferris, Michigan State University created a very good visual matrix for selecting the right marketing tools to fit the four possible relationships between expected futures movements and expected basis movements.

1.      Futures up + Basis strengthens = Store or wait to Forward Contract, Delayed Pricing Contract, Minimum Price Hedged-to-Arrive Contract

2.      Futures up + Basis weakens = Basis Contract, Minimum Price Contract, Sell or Forward Contract and buy Calls, Sell or Forward Contract and buy futures

3.      Futures Down + Basis strengthens = Hedge (sell futures), Hedged–to-Arrive Contracts, or Buy Puts

4.      Futures Down + Basis weakens = Cash Sales or Forward Contract

While this matrix can’t help you decide which way the markets will move but once your crystal ball has provided that insight for you this matrix can guide you to the right marketing tool to maximize your return. 

I have this information in the form of a visual matrix which I can print for you or email to you as a pdf file if you would like a copy.

 At the marketing meeting in Lignite a couple of weeks ago Frayne Olson, NDSU Extension Marketing Specialist provide producers with a look at a Marketing Plan Spreadsheet to help producers balance marketing multiple crops with cash flow and storage needs. I now have an electronic version of that spreadsheet for producers who would like to try it out. I can provide it in either an Excel 2010 or Excel 97 through 2003 file format.

If you would like a copy of the spreadsheet or the matrix email me at dan.folske@ndsu.edu or call the Burke County Extension Office at 377-2927