Minding Ag's Business

Rhett Montgomery
DTN Lead Analyst

"Hope is not a marketing plan." This was the message sprawled in red ink across the top of my Commodity Marketing course's term paper a little less than a decade ago when I was a senior at the University of Nebraska. It is a mantra I've carried with me through my career as a grain merchant, broker and now analyst.

It seems at first like an overtly pessimistic statement; after all, agriculture in general is an industry built year in and year out on hope. Hope for rain, hope for the safety of operators and hope for profitable prices. In the case of the latter, I would expand the phrase to "Hope alone is not a marketing plan." Of course, we all hope for ample opportunities to lock in profitable prices, but planning ahead is crucial in maximizing efficiency while ideally minimizing stress.

The 2024-25 marketing year could very well go down as one of the most challenging years for grain markets. Especially in the corn market, official USDA ending stocks relative to demand pointed to a much more bullish situation than prices ever reflected. Additionally, typical seasonal price tendencies went relatively ignored. If there was a lesson to be learned from the past year, I suppose it would be the need for flexibility and adaptability in one's marketing plan, which is most definitely among the top mistakes I personally made through the year.

Commodity markets offer little time for dwelling on the past, however, and marketing mistakes must be quickly learned from and applied to impending market opportunities. Looking ahead from October, for those with unpriced 2025 grain, it is first and foremost important to know what tools are available to you.

As one example, I would strongly encourage a discussion with your local grain buyer on basis contracts, which allow producers to wait on pricing futures, while also avoiding costly monthly storage fees associated with delayed pricing contracts. From there, the current fundamental situation can be paired with typical seasonality to set reasonable price targets with your broker or grain buyer.

Whether it be futures, options or cash sales, there are several avenues for navigating price risk for your operation. No matter your tool of choice, being both realistic and adaptable are characteristics of a successful marketing program.

The best advice I could give is to be consistent with sales: 10 to 20% at a time will surely keep you off the low. Small portions will also help you to resist the urge to move orders higher and avoid chasing the market on missed orders. As I am still learning, sound marketing requires an abundance of discipline, vigilance, and of course, a little hope is OK, too.

Rhett Montgomery can be reached at rhett.montgomery@dtn.com

Follow him on social platform X @R_D_Montgomery

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