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Cash Smart, Balance Wise

What’s Happened…

In recent weeks, volatility in crop prices has picked up. As of this writing, wheat has rallied near 50 cents and soybeans nearly $1.00. As marketing opportunities unfold for the 2026 crops, marketing strategies will be more important than ever. Tight margins (due to high input costs) and low commodity prices have farmers on edge. There is little room to make errors in marketing decisions. Every year is different. Assuming that big production is automatic could be a huge mistake. At the same time, selling too much too soon could prove costly. A well thought-out, strategic, balanced marketing approach will likely serve many well in the year ahead.

Why this is Important…

Selling crops on a price rally initially makes sense. Yet, if prices continue to rally, adding to sales becomes increasingly challenging. You would feel foolish selling too much if a bigger rally is just starting, and you miss bigger opportunities. Yet, if prices stall or drop, then you have not sold enough. It can become a vicious circle of never ending second–guessing to the point where the stress of decision–making can cause one to shut down. Then, nothing happens. Doing nothing is then the strategy, which can be the most speculative and least responsible approach to marketing. 

What can you do about it?

Be cash smart and balance wise. Challenge yourself to learn more and execute with intent. Don’t execute partially and see what happens. Doing anything partially likely will yield partial results. Set specific target points for specific bushels. Use charts to help guide you to your target levels.  

Good cash marketing is key to a strong marketing strategy. Add balance to your strategy. Learn how bought call options can work by covering sales with call options. In quiet markets, consider investing in calls before prices rally. Think about it. If you are not selling cash grain because prices are too low (and you are willing to wait for rally), buying calls can give you confidence to execute sales without hesitation when a rally does occur. This is the very definition of “cash smart and balance wise.” With cash sales made on a rally and call options in place, you have balance. If prices move higher, you are not second-guessing early sales. Instead, you are planning to confidently make additional sales. On bushels you don’t intend to execute cash sales, consider buying put options.  

The whole goal is to be able to sell a price rally responsibly and be prepared for a year when prices could double in value. Currently, it feels as though farmers are willing to sell large amounts of expected crop production on small to moderate rallies just to get by. Unfortunately, for these same farmers, if a big rally occurs, they will benefit little and farm income will suffer without a balanced marketing strategy.

Find out what works for you… 

Work with a professional to find the strategy or strategies that are best suited for your operation. Communication is important. Ask critical questions and garner a full comprehension of consequences and potential rewards before executing. The idea is to make good decisions for the operation and less emotionally–charged responses to market moves, which are always dynamic.   

About the Author: With the wisdom of over 36 years at Total Farm Marketing and following across the Grain Belt, Bryan Doherty is deeply passionate about his clients, their success, and long-term, fruitful relationships. As a senior market advisor and vice president of Brokerage Solutions, Doherty lives and breathes farm marketing. He has an in-depth understanding of the markets and marketing tools, a strong listener, and communicates with intent and clarity to ensure clients are comfortable with their decisions. 

The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Individuals acting on this information are responsible for their own actions. Commodity trading may not be suitable for all recipients of this report. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Examples of seasonal price moves or extreme market conditions are not meant to imply that such moves or conditions are common occurrences or likely to occur. Futures prices have already factored in the seasonal aspects of supply and demand. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Total Farm Marketing. Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. SP Risk Services, LLC is an insurance agency and an equal opportunity provider. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with all three companies. SP Risk Services LLC and Stewart-Peterson Inc. are wholly owned by Stewart-Peterson Group Inc. unless otherwise noted, services referenced are services of Stewart-Peterson Group Inc. Presented for solicitation.

Author

Bryan Doherty