Which is the Bigger Regret?
What’s Happened…
Price rallies come and price rallies go. When they come so does an increased stress level for producers. Should I sell? How much should I sell? Or maybe I shouldn’t sell anything. Should I try another marketing tool? These are common questions that accompany a price rally. Farmers, like everyone else, do the best they can. A lot rides on the outcome. Unfortunately, there are no simple answers. Decisions are made with the information you have at that time. Nobody can know with certainty what the market will do tomorrow, let alone several weeks or months from now — periods of time that will magnify the consequences of your decisions. Spending time analyzing a market may help yet also can become overwhelming. Too much information can cloud the process. The easiest path may be to kick the can down the road and see what happens.
When you know you should act but are not sure what to do, err on the side of doing something. In this author’s experience, farmers worry more about selling and being wrong than not selling and watching prices fall. Yet when prices do decline, fear and regret follow. Make a sale. Ask yourself, where will I feel the greater regret — selling and prices move higher or not selling and prices move lower? Hindsight and past experiences are valuable learning tools. Use them to recall just how lousy it feels when prices drop and an opportunity is missed.
Why this is Important…
The obvious consequence is financial. Just as important may be the debilitating second guessing and stress of not only watching prices decline but having to possibly wait for months just to see if prices can improve. The grain markets are notorious for quickly falling apart. Many vow next time will be different. They won’t let good prices escape. Unfortunately, when the next price rally occurs, without a different approach, the odds favor the same net results. An intentional change in how one makes decisions has to occur. Things are not going to magically get better without action. Different results require a different approach.
What can you do about it?
Consider two changes. The first is to simply ask, where is the greater regret? Rather than delay a decision, make one that is more informed. Put the math to the potential outcomes. This may seem simple but can be powerful. It can help to take the emotion out of your decisions.
Second, create and execute a proactive, intentional and balanced marketing approach. Conversations with a professional advisor can help you implement strategy using the right tools at the right time. A well-planned approach with another set of eyes on it will have already answered in advance what your next move will be if prices reach a designated level. It is never too late to get started. The markets are always dynamic. Preparation is paramount.
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, an excellent 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