A corn or soybean marketing plan can be plowed onto one page for most growers — just as long as they know how to escape a “trap.”

Melvin Brees, University of Missouri Extension economist and part of the Food and Agricultural Policy Research Institute (FAPRI) in Columbia, says a good marketing plan can prevent spur of the moment sales based on the emotions of greed or fear.

Brees and his FAPRI colleagues outline farmer-friendly marketing plans on their Web site, www.fapri.missouri.edu/, on the Farmer's Corner link, found along the left side.

And Brees says that volatile corn and soybean markets can be worked into simple but workable plans.

“Some written marketing plans are complex and contain multiple pages,” he says. “They can require considerable production information, financial data and market information to prepare. They are time-consuming and difficult to monitor. Farmers are reluctant to revise or update them as market conditions change.”

A one-page marketing plan can be just as effective as a business tool. “It's easy to update and use and can be referred to quickly for making sales decisions in volatile grain markets,” says Brees.

Marketing should begin early, sometimes even before a previous year's crop is harvested. A preplant or growing-crop one-page plan can be an easy guide, says Brees. It should first include information on expected production, available storage and expected delivery at harvest. The amount of corn or beans to sell, previous sales and average prices received, price protection used (put options, minimum price contracts, etc.) and the balance to sell are also essential items to a sound marketing plan.

Projected price objectives are the most important aspects of a good plan. Objectives should include targets for the upside and downside “traps or stops” and may be listed to coordinate with the initial production and sale information.

Space should be provided for first, second or more sales for target and stop prices, based on whether they are futures or cash prices, the amount sold and when sales were made.

A separate section should list types of options used, a strike price for the puts or calls, the number of contracts or bushels, the sell and/or buy premium costs and the gain or loss from the options.

There's still room in a one-page plan to list price outlook, fundamentals and seasonal price trends,a short summary of a grower's strategy, then a flex strategy for “what if I'm wrong?” The trap or stop level prices identify prices that should be considered if original upside objectives are not met and markets start to decrease.

“All of us are often wrong about the markets,” he says. “That's where we need to build some flexibility into a marketing plan. That's where the price ‘trap’ or stopping point can help prevent major market wrecks, which should play a vital role in even the simplest marketing plans.”

A FAPRI post-harvest one-page marketing plan continues from where the preharvest plan concludes. It enables growers to determine then follow a marketing strategy for stored grain.

MARKETMAXX MARKETING PLAN

The MarketMaxx Web site, www.MarketMaxx.net, can also guide you through writing an easy-to-use marketing plan for use with the MarketMaxx game or in real-time corn and soybean marketing.

The site features a marketing plan template. There is a marketing actions box that lists the strategies you will use if the market moves in your favor.

The template's default actions box lists the strategies you may use if the market moves against you. You can refer back to your personal marketing plan throughout the game and edit your plans at any time by using the edit button.

Whether you use the FAPRI marketing plan, the MarketMaxx template or another plan, the trends of corn and soybean prices must be considered, even if they are off the beaten path.

For instance, supply and demand numbers sometimes don't coincide with price levels. Last spring's large soybean stocks didn't stop markets from pushing into the mid-$8 range for 2008.

“We'll be back to where we were leading into 2007,” says Brees. “Corn and soybeans will be bidding for acres.”

Normally, a soybean-price to corn-price ratio of 2.2- or 2.1-to-1 is needed for beans to equal corn in producing an equal return per acre. “If corn is $4/bu., then you need more than $8 soybeans,” says Brees, adding that growers need to consider the different marketing tools available to tame the volatile market and make a viable marketing plan work.

“They need to look at cash sales of beans as well as options strategies that enable them to protect a price and still leave the upside open for a price increase,” Brees says.

Growers should remember that the ethanol phenomenon will remain the most important influence on corn prices in 2008 and probably beyond. “We are projecting high prices in the years ahead,” says Brees. “We should see prices supported at a higher level. I call it a ‘price uptrend’ instead of a ‘higher plateau.’”

Whether it's locking in soybeans in the $8 range or corn that's near $4, Brees says growers also need to look at the technical trends and the price trends they follow.

“Look for spikes in trends and breaks in trends to help determine when to make sales and/or alter a marketing plan,” he says.

Volatile markets mean growers must be better marketers. There are more times to make high sales throughout the year. Yet, many growers still don't use futures or options in their marketing out of fear.

“A lot of them are scared off by dreaded margin calls,” says Brees. “But growers need to be more comfortable using futures and options because there are many marketing opportunities that require these tools.”

Brees indicates that more growers are using cash contracts that are available in a wider variety from local grain elevators and major grain handlers like Cargill, ADM, AGP Ag Processing and others.

Brees adds that basis levels are more volatile, and there are times when growers need to “lock-in and not lock-in” a basis. “Basis trends should be worked into the marketing plan to help determine the best time to secure the best levels,” he says.

Developing a marketing plan and a strategy for it may require using a marketing service to help growers take advantage of higher price levels. But no matter who writes a plan, it will likely need tweaking.

“Remember, the primary objective of a written plan is to set reasonable price objectives and facilitate disciplined marketing,” says Brees.

“Plans should be reviewed or updated every two to three months or when previously planned sales objectives have been met.”

For more information on developing a marketing plan, go to www.MarketMaxx.net or www.fapri.missouri.edu/.