How many times have you sold your grain under a contract that had exactly the price and the terms you were looking for?  Some years are probably better than others, right?

We talk to producers all the time about how important it is to have the freedom to choose when and where to sell grain, the choice to talk to multiple buyers, pricing transparency, and control over the entire process.  In fact, it’s the basis on which we built CXN360.  And more often than not, we end up having great discussions about control and the role of choice when considering pricing and terms.

You’ll never find the balance if you can’t see the whole picture

As a grower, you don’t want any barriers between you and the information that can help you make an informed decision. Grain marketing is far too important for that.

One of the most common barriers I see comes when farms limit themselves to only talking to a select few grain buyers.  By doing that, you only see a small part of the picture.  Especially in today’s grain market  where you have diverse marketing options, you want to see what’s out there before you decide.

I’ve said it before, and I’ll say it again (and again, and again).  Our grain marketing options are not the linear farm-terminal-port options of the past.  The industry is structured like a spiderweb that is an interconnection of buyers, end users, processors, crushers, shippers and niche markets.  You can (and should) be investing some time in getting to know who these companies are, so you can see what they can offer you.  It’s the best way to get the whole picture, and not just an isolated snapshot of the market.  And keep in mind, the whole picture needs to contain not just pricing information, but transparency into who the buyer is, what their terms are, and the details of their contract.

When the deal you see isn’t the deal you want

We often hear about growers being at odds with one or more of their preferred buyers. It usually stems from the grower having to compromise on either the terms or the price on a deal.  It’s not an ideal situation, especially considering that you’d like to think of the grain buyer as a partner in all of this.  And, let’s be honest. Most of the grain buyers out there think the same way.

It does come back to the availability of options.  If you explore other offers from other buyers, you can see that either your preferred buyer does have the best price + terms option, or they don’t.  No speculation, no us-vs-them mentality, no need for conflict.  Information really is power in this case, and it’s in your hands to make the best decision for your situation.

Where is the balance?

When you see the big picture, you potentially have a smorgasbord of contracts to consider.

Sometimes the best price is when you can’t move your grain.

Sometimes the best terms are when the price is the worst.

The balance for your operation will most often come down to what you’re comfortable with and your cash flow situation.  As yourself these questions:

  • What is the cash needed for today?
  • What are the risks if the delivery terms are not met and your cash flow is delayed?
  • Are the current options the best ones for you, or are you settling?
  • What outside factors will impact your ability to meet the terms?

Forward marketing can give you some assurance of price with a delivery window, especially as it relates to movement.  And, this winter (’17-’18) has once again proven that there is a great deal of risk when movement terms rely on parties who are not involved directly in your deal.  Many grain contracts have a 90-day delivery window, and the price won’t self adjust for you.  In these instances, finding an opportunity to contract locally to those who are less reliant on the railway for movement will help you with your cash flow/ price and terms. The canola crush business in Western Canada definitely helps out with that.

My best advice?  Before you settle you should engage more buyers and explore the terms and price that meet your needs.  Many of the growers using CXN360 have told us that the easiest way for them to do just that is to put their grain out there in the form of an “ask”.  It gives them an opportunity to market their grain to multiple buyers at the same time – without over committing.  They review what comes back to them and then make decisions they’re comfortable with.  I firmly believe that is the best position you can be in if you are bargaining – starting from your initial point versus having to defend a position.