This presentation was produced and is copyrighted by Stewart- Peterson®, Inc. 2003-2005. Permission is granted for use by active AgEdNet.com® subscribers. All other use is prohibited.

STEWART-PETERSON and AGEDNET.COM are registered trademarks of Stewart-Peterson, Inc.

MK103 Finding Market Alternatives for Grain

Marketing Library

How can a producer find the best place to sell grain?

• U.S. grain producers have many marketing alternatives:• Passive price taker – works hard at efficient

production, then takes market price at local market at harvesttime. May sell to have cash to pay bills.

• Aggressive marketer – takes time to check all alternatives including additional market locations and market tools like futures, options, and cash contracts to reduce the risk of shifting prices.

What is a market?

• A market is made when buyers and sellers agree on terms to complete the sale or trade of products or services.

• Retail sellers try to attract buyers• Retail stores at a particular location (gas

station, grocery store)• Retail without particular location (direct

mail/Internet/TV shopping channels)• Auction (can also be electronic)

What about agricultural markets?

• Markets established by buyers to attract sellers are more common in agriculture than in any other industry.

• That’s because agriculture is made up of a large number of producers selling to a small number of buyers.

USDA photo by Ken Hammond.

RETAIL

SALES

AG

SALES

# of

Buyers Many Few

# of

Sellers Few Many

Comparing retail sales and ag sales …

Grain producers could learn from aggressive retail sellers

• Use every means to findbuyers for their products• Use grain as animal feed.• Sell crop as food.• Consider export sales.• Check prices at various elevator locations.• Cut out some middlemen.

• These are all decisions about where to sell.

USDA photo.

You must also decide when to sell and how to set the price …

• Delivery and pricing do not need to happen at the same time.

• Passive price takers will accept whatever is offered.• Choices are limited.• Prices are often low at harvest.

• Aggressive marketers will consider alternatives. • Forward pricing using cash contracts• Hedging grain in the futures or options market

This presentation was produced and is copyrighted by Stewart- Peterson®, Inc. 2003-2005. Permission is granted for use by active AgEdNet.com® subscribers. All other use is prohibited.

STEWART-PETERSON and AGEDNET.COM are registered trademarks of Stewart-Peterson, Inc.

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