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Tackling 5 Common Grain Marketing Mistakes

A visit with award-winning grain marketing educator Ed Usset.

What’s a common characteristic of a winning sports team? Ed Usset, a professor at the University of Minnesota’s Center For Farm Financial Management, frequently asks farmers, ag students, and now listeners of the ADM In the Driver’s Seat podcast.

The answer: They make fewer mistakes.

“Think of your favorite football team,” says Usset. “How much better they would be if they didn’t fumble the ball in the red zone, did not jump offsides on third and short, did not throw interceptions… It’s a common theme in all sports that the best teams don’t make a lot of mistakes.”

Usset brings this analogy and mentality to grain marketing education. He says it’s not about beating the market. It’s how to analyze it and figure out which way it is going. If producers learn and eliminate mistakes, their grain marketing game will be more competitive and their profitability will steadily grow. It doesn’t mean winning every year. It’s about closing your margin of error in the long run.

With 31 years of data to back up his claims, which he has distilled in his book, “Grain Marketing is Simple, It’s Just Not Easy,” he has a lot of sage advice to offer. In this newest podcast episode, Usset shares his insights and tips to help producers try to avoid these common mistakes:

  1. Not forward marketing
  2. Failing to understand your local basis
  3. Failing to have an exit strategy—a game of endless waiting
  4. Failing to watch seasonal pricing patterns and holding grain too long
  5. Not understanding when the futures market is telling you to hold or sell grain

All of Usset’s mistakes hinge on each other and ultimately encourage producers to make more well-rounded decisions. When talking about the importance of understanding basis, he says producers who pay attention to their local market and understand a good or bad opportunity in basis, are the ones who gain a nickel here and a dime there. Even though it can feel like baby steps, they are in a position to make better grain marketing decisions.

Along with a pulse on the market year-round, historical data in his pocket, and real-life experience, Usset has amusing stories and characters to illustrate his main points. For instance, Usset shares tales about two “celebrity farm producers,” Hank Holder and May Sellers, who have starkly different approaches to grain marketing to talk about generally the best time to market grain.

“In any 10-year period in the last 50 years in Illinois, Minnesota, or Nebraska prices…the average chart will show the lowest prices at harvest and the highest prices in the spring, early summer,” says Usset.

But it’s not an exact science. Markets like this year do occur and conflict with normal seasonal patterns, but history has presented patterns and the best way to prepare is with a solid game plan and decision-making throughout the year.

Usset asks listeners to track their local market as well as broader market activity, revisit their plan and not get stuck holding grain too long. He urges producers to understand the concept of carrying charges and the seasonal pattern of grain prices. For more of Usset’s rewarding and entertaining lessons, tune in to this podcast.

Through the new risk management and grain marketing platform, GrainBridge, you can put Usset’s insights to work. Sign up here for a GrainBridge account today.

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