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Macon, IL | Of all aspects of the farm I have to admit marketing is my weakpoint by a large margin-no pun intended. My early New Years Resolution for 08 is to be more disciplined in my marketing rather than flying by seat of my pants.
I have only been farming 4 years so cash flow is tight-and I need about 70% of my income in the fall to pay off operating line and cash rent. Because of this the last 3 years I try to be 60-70% sold going into summer-but never seem to make it...and have had to sell too much at harvest lows.
So this year I am taking 1/2 of my expected production and following a written plan-and not looking back-had I done that in the past I would be better off today.
What I did is I set a high and low price and a date for 12 sales points. (Shown Below). I will sell when either the Hi or Low or Date is hit. For example on the 3rd line I sell on 12/1/07-or anytime corn goes below 3.50 or above $4.00. Using this approach the minimum I would average is $3.40 (which is profitable), and the max average would be $4.50-knowing full well I will probably end up in the middle but I wanted to leave some room for upside without being too greedy.
I am a risk taker but not extreme one-I have no interest in trying to double my money leveraging the market or timing short term stuff-just want to get the best price I can for what I grow.
Maybe this is sharing too much information, but I know there are a lot smarter people here than me-but my hope is by sharing this someone could poke a hole or two now or expose some downside I am overlooking and I could adjust for next year.
Below is my example with hypothetical bushels, Fire away.
Corn (Eleator Price)
Date.............Hi......Low....Bu..Low Tot...Hi Total
10/15/2007 $3.50* $3.50 1000 $3,500 $3,500
11/01/2007 $3.75* $3.50 1000 $3,500 $3,750
12/01/2007 $4.00* $3.50 1000 $3,500 $4,000
01/01/2008 $4.00* $3.50 1000 $3,500 $4,000
02/01/2008 $4.50 $3.50 1000 $3,500 $4,500
03/01/2008 $4.75 $3.50 1000 $3,500 $4,750
04/01/2008 $4.75 $3.50 1000 $3,500 $4,750
05/01/2008 $5.00 $3.40 1000 $3,400 $5,000
06/01/2008 $5.25 $3.30 1000 $3,300 $5,250
07/01/2008 $5.25 $3.30 1000 $3,300 $5,250
08/01/2008 $4.75 $3.20 1000 $3,200 $4,750
09/01/2008 $4.50 $3.10 1000 $3,100 $4,500
Total 12,000 $40,800 $54,000
Low Ave $3.40 High Ave $4.50
*=1st 4 sales have hit high and been sold
Edited by pbutler 12/14/2007 13:48
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Marketing Plan-Fire Away
