Grain trading strategies

Crop prices change very quickly, which is extremely important when trading grain, including on a regional scale. The best way to find out, what happens to prices in your area – use the website, where price information is collected. for example, «». There are other ways to optimize grain sales:

• track the change in the base price;

• control grain storage costs;

• adhere to the developed marketing plan.

Base Price Tracking

Your local grain purchaser (elevator, enterprise, etc.) can use the futures market, to solve, what price to pay for grain. Usually the price "on the board" does not match the price, which you are willing to pay. The difference between the price of the futures market and the local price is called the basis.

The basis is set by each buyer and helps to account for the costs of buying and resale of grain, as well as local supply and demand. It means, that different buyers of grain will have a different basis. For most buyers, it has a predictable structure.. Tracking baseline over time, you can define, whether it signals the sale or storage of grain.

If the base price is higher, than the average basis for this time of year or recent trend, this may signal the advisability of selling grain. If the basis is below the specified indicators, the situation indicates the need to store grain.

Storage costs

The key factor when deciding whether to sell grain to the market is the cost of storage and transportation of grain.. The longer you store grain, the more these expenses eat up your income. Even if you store grain on the farm, its maintenance is expensive.

Drawing up a marketing plan

Make a written marketing plan. Receiving Market Price Updates, keeping track of local conditions and knowing your storage costs won't help, if you don't have a marketing plan, as it can be difficult to do the best, when it comes to selling grain.

By writing it, you no longer measure today's price against yesterday's, but estimate the current price according to expectations, which you have set in your plan. Least, your plan should include:

• the price, at which you want to sell grain;

• date, to which you want to sell it;

• amount of grain, which you sell.