When you work from home like I do, some days your brain starts going like a ferret on energy drinks. And today is one of those days. I keep thinking about grain prices and how growers don’t really have benchmarks to say this grain price is “good” and this one isn’t.
Isn’t a good grain price a personal decision?
It really is up to you to define what a “good” price is for yourself. The entire situation in your business (aka your farm) comes into play. There are lots of different elements and factors that you need to consider when you look at any single offer from a grain company. It’s not just about the numbers and terms from the buyer(although that’s important), it’s also about things like your production costs, break even point, and your overall marketing plan.
What do you use as a comparison?
I know evaluating grain prices has been talked about before and by others who come at it from a different angle. If you want, you can Google for advice on analyzing a grain price and you’ll find lots of suggestions for budgets and financial analysis. This isn’t one of those blogs.
This blog is about the need for benchmarks as part of your decision process.
I’m not going to tell you how to calculate or predict or factor anything into a math equation. You know you need to understand your numbers to make a solid business decision about a grain offer.
I’m going to ask you to think of “good” grain prices in the context of Good vs Bad (or “not so good”). It’s relative.
Ask yourself this:
Is the offer you’re looking at a good one compared to what else is out there?
How do you know?
How do you benchmark a price for grain? (Hint: It’s not easy! I’ve tried.)
Benchmarking grain prices vs benchmarking Millennium Falcon prices
I am writing this at holiday time so like many others, I’ve been doing some online shopping. My son will find the Millennium Falcon Lego set under the Christmas tree this year. And, I did what I do with any significant purchase these days, I put “Millennium Falcon Lego Set” into the Google machine. Over 7.8 million results appeared, including this snapshot to make it all nice and easy.
Not all of these were the right set, so I needed to narrow my search a bit using more specific details. But, all and all, it was easy for me to determine the best price and make my decision about how much I was willing to pay and where I wanted to get it from.
By comparison, I Googled “hard red wheat prices” and this is what I got. I’m not surprised by the results, and you probably aren’t either. This isn’t how grain is bought or sold. You don’t find grain prices and terms as easily as you do for consumer goods.
So, if you can’t just Google benchmarks for grain prices, how do you figure out the best price, terms, and delivery for the grain you want to sell?
I have tried various times over the last few months to find this information, and the best spot for data on a handful of crops is the Alberta Wheat Commissions PDQ site. Beyond that, it’s buyer specific and you have to go to their websites, log in (if you have an account), or comb through the text offers you’ve received from buyers. It can be a lot of work to be thorough and make confident decisions.
What is PDQ?
PDQ is timely, accurate, transparent cash grain price information.
PDQ is an information service providing cash grain market price information and related statistical data. Owned and operated by the Alberta Wheat Commission, PDQ is provided as a free service to all market participants
How our members are finding their grain price benchmarks
For many of our members, they’re finding that CXN360 is helping them resolve this issue. The service was built on the premise of market transparency and it’s making a difference for members who want and need better insight into the market.
Not only do the regular offers they receive via text provide them with a snapshot of the current market (and an opportunity to act if it fits), but members also receive a series of reports including:
- How weekly CXN360 prices compare to prices in PDQ
- A monthly summary of bids by commodity
- Bids summary over time, organized by commodity
- And others that are built into the service.
Its about visibility for our members so you can make good decisions about the offers that you receive. Good information helps you make good decisions. It helps you decide if that grain price is a good one.
Will Costco price match my Millennium Falcon?
Back to my shopping story. I bought my son’s Millennium Falcon Lego at Costco. Their price was pretty close to most of the others, and we’ve had a good experience there with things like returns. So, that’s where I went. Costco does not have a Price Match policy so they wouldn’t adjust the price based on the lowest advertised by their competitors, but I was ok with that.
Imagine if Price Matching was available in the grain industry? It doesn’t exist, but some of our members are using the Ask feature in CXN360 to create their own offers based on what price and terms they want buyers to match. It puts them in the driver’s seat and the data they have available helps them set a realistic Ask that makes sense in the current market.
Two ways to get a good price for their grain.
Happy holidays, and happy shopping.
Want to learn more about the reports or Ask service in CXN360. Request a demo today.