KANSAS CITY, Mo. (NAFB) — With crops in the field, now is a good time for farmers to review their grain marketing strategy. Matt Bennet is an Illinois farmer, commodity broker and grain marketing consultant for Channel Seed Brand. Bennet says farmers need to figure out their break-even numbers if they haven’t already. “So now that the crop is in the ground they know a little bit more about what their yield potential is. At this point we can probably adjust our yields a little bit. That might adjust what price level we need to break even. I always want to put all this in the profitability spreadsheet that I developed for Channel. I want to be able to look at hard numbers because if you look at hard numbers it takes the emotion out of marketing.”
Bennet developed a profitability calculator provided by Channel online that allows farmers to calculate their profitability potential. “If you go to Channel.com you can see the calculator in a little bit different form than what I developed, but with all the exact same formulas and everything. Once you get all your information plugged into there as far as what you’re spending, it has a customization aspect to it. You can figure those things in and once you plug in what your yield forecast is, you’ll know what you’re break even price is for corn or soybeans. The other way of looking at it is you put all your numbers in other than the yield, and you put in what the price is today, and it tells you what yield level you’ll have to have at today’s price.”
He says the calculator can help farmers make marketing decisions this year in real-time. “One thing that we can do, is that we look at different kinds during the calendar year. Guys will say you know what I sold in June last year and I’m going to sell in June again this year because I think that was the best time. I always tell them no let’s be figuring our break even price level as the year goes on. Let’s keep current with this thing. All times of the year we have to know that break even price level because if we know that they can definitely help us make decisions. I always say I would like to make a business based decision rather than an emotional decision because a business based decision based on hard numbers is easier to make than just simply a wishing and hoping we make more money than we can make today.”
He explains how a farmer can use the calculator to help them. “Maybe I have the best looking crop I’ve ever had and I’m all the way through pollination. At that point I may be more willing to sell corn at $3.95 than what I was previously because instead of looking at a 200 bushel crop, I might be looking at a 240 bushel crop. I have to be willing to be flexible. I have to be willing to look at this thing as the growing season goes on, and be willing to change my numbers. [I have to] understand that my program has to be as flexible as possible. I have to be as proactive as I can possibly be when it comes to executing my trade, whether its a trade that we’re making where we’re putting a floor under the market or it’s simply where we’re making a sale at the elevator. When I get to those levels where I know I can make money I have to be willing to follow through with it.”
Visit Channel.com/Markets to access the Profitability Calculator.