After opening mail last month, I realized how differently customers use our advice — and the widely differing expectations that farmers have of a marketing service.
The first note said, in part, “Your advice on the hog market and in buying fuel ahead made our farm enough extra money to renew our subscription for a lifetime. Thanks for your help.” He'd also enclosed a check for his annual subscription.
The second note said, in part, “Your hog advice stinks and you had me sell corn ahead way too soon. I can lose money without your help.” The envelope did not include a check.
At a strategy session later that day, my staff discussed customer expectations and how to satisfy the wide variety of customer needs that we work with.
Overall this year, our advice at NorthStar has worked well. We did sell hogs ahead — a little early. But producers who put on hedges and stayed with them did well, too.
We'd sold some corn ahead before the big rally started. But we also got some hedges on close to the top because the average looked good at harvest. That made us realize we should profile our customers and prospective customers. By asking the right questions we hope to help them find the right marketing service.
Before you hire or subscribe to a marketing service, here are some of the questions we'd ask:
- Do you enjoy marketing?
Are you willing to check a Web site or call a 1-800 number each day to get the latest advice? Do you hedge and use futures and options? Do you want to work one-on-one with an advisor? If you answered “yes” to most or all of these questions, you'll probably be happy working in a consulting and brokerage relationship.
- Are you strapped for time?
Would you rather figure out how to fine-tune your combine than attend a marketing seminar? Are you too busy with farming and family to check for marketing advice each day? Would you like to have someone get the crop sold for you? If you answered “yes” to some or all of these questions, you should sign up for a managed grain contract as soon as possible.
- Are you Internet savvy?
Do you check several Web sites at least once a day and your e-mail several times a day? Then you should consider getting a low-cost electronic newsletter or e-mail update.
After you've selected a marketing service, make sure you use it. Ask questions that are bound to pop up and make sure you follow the advice for the entire year.
The most frustrated customers this year are farmers who made corn and soybean sales early in the year, before the rally. Then they got bullish and failed to make any scale-up sales when prices were high. They ended up selling on the bottom of the rally — before and after but not during the rally.
As we approach the end of the year, our marketing advice for corn and soybeans is straightforward. Corn sales should be at 60-80%. If not sold at that level, consider making additional sales by mid-December. Usually, that's a great time to make catch-up sales.
For soybeans, 40-100% of the cash beans have been sold. Look at the futures market alignment and check your cash bids ahead into next year.
You're going to see that storing soybeans doesn't pay. That's why we suggested to customers who use futures and options to get 100% sold in November, and then buy back May soybean futures and/or call options. If it doesn't pay to store soybeans, don't.
Alan Kluis is executive vice president of NorthStar Commodity Investment Co. If you have marketing questions or want more information, write: NorthStar, 1000 Piper Jaffray Plaza, 444 Cedar Ave., St. Paul, MN 55101; call: 800-345-7692 or e-mail: firstname.lastname@example.org.