Make – And Follow – A Marketing Plan

USE RMA backup to manage price

Ed Usset’s marketing plans are supported by USDA Risk Management Agency Revenue Protection (RP) insurance. “In my sample production (see main story), I buy crop insurance to protect my production risk and have 75% of my anticipated corn crop priced by early June,” says the University of Minnesota Extension economist.

He’ll be looking at the 2012 RP insurance soon, but set his 2012 corn plan last spring. He had $4.25 cash as the minimum sales price for corn. His soybean plan hasn’t been written. On July 8 he made three separate 10,000-bu. sales using $6.14 December 2012 futures.

Marketing consultant Doug Johansen says early 2012 Russell Consulting Group marketing recommendations for corn featured three 5% sales,one in April for $5.75 December 2012 futures, and two in June at $6.25 and $6.29 December 2012 futures, and one 10% sale; in September at $6.03 December 2012 futures. One 5% sale was made in April using $13.05 November 2012 futures.

 “Factors affecting commodities change constantly and often without warning,” he says, reaffirming why a marketing plan is needed. “Marketing plans help you avoid making panic sales on plunges or stalling on rallies. When markets rally, it’s natural to feel badly for selling early. When markets set back, you feel pretty good about early sales.

“It’s a vicious cycle that can tear you up if you let it. You put orders out there that meet reasonable objectives and fill them when you can,” Johansen says.