See national chem pricing trends in the FBN Research report
In today's complex agricultural market, an effective grain marketing strategy involves a portfolio of buyers, each offering different opportunities.
Diversifying your sales channels isn't just about finding the highest price on a single day. It's about optimizing basis, managing risk, controlling logistics, and leveraging your crop’s specific characteristics to capture maximum value.
Here’s a strategic breakdown of the different types of buyers and how to incorporate them into your marketing plan.
The local cooperative or terminal elevator should remain the backbone of your marketing strategy, offering unparalleled convenience and liquidity. You can haul your grain there directly from the field, receive a straightforward cash bid, and access a wide range of marketing contracts, from hedged-to-arrive (HTA) to basis contracts.
Strategic Use:
For Convenience: Use the local elevator for a portion of your crop that needs immediate off-farm storage or sale, especially during the peak of harvest when efficiency is critical.
For Basis: Monitor their basis bids closely. When their basis strengthens, it signals a strong local demand and can be a great opportunity to lock in a price.
As a Benchmark: Use their cash bids and contract offers as a baseline to evaluate all other opportunities. They are your market's constant reference point.
Processors are end-users of your grain — ethanol plants, feed mills, food processors, and crush facilities. They are often willing to pay a premium because they eliminate a step in the supply chain and have a constant, year-round demand for a specific product.
Strategic Use:
Capture Premiums: Look for premiums on specialized traits, like high-oil corn for an ethanol plant or non-GMO soybeans for a food processor. These buyers are looking for specific specs — if your crop meets them, you can command a better price.
Manage Logistics: Selling to a processor requires logistical planning. You need to understand their delivery windows and quality requirements. The premium you gain must offset any additional trucking costs or wait times.
Establish a Relationship: Building a direct relationship can lead to favorable contracts and opportunities, such as fixed-price contracts for future delivery, which can provide price certainty and cash flow stability.
For a Midwestern farmer, river and rail terminals are the gateways to global markets. These facilities ship grain on barges down the Mississippi River or by rail to coastal ports, connecting your grain to international buyers. Their bids are often driven by export demand, not just local supply and demand dynamics.
Strategic Use:
Leverage Weak Local Basis: When your local elevator's basis is weak (meaning the cash price is significantly below the futures price), a river or rail terminal may offer a much stronger basis. This is a classic arbitrage opportunity. If the gain in basis outweighs the extra trucking miles, it could be an advantageous move.
Scale of Sale: These terminals are designed for large volumes. They are ideal for moving a significant portion of your crop in a single, efficient transaction.
Off-Season Selling: River terminals often have strong demand during the off-season to fulfill export contracts. This can be a great time to sell stored grain when your local market is sluggish.
A growing segment of the market includes buyers who will pick up grain directly from your farm. This could be a small local feed mill, a livestock producer, or a grain broker with a network of buyers. Grain brokers act as intermediaries, connecting you to multiple buyers and helping you navigate pricing and logistics.
Strategic Use:
Capture Value from Storage: If you have on-farm grain storage, you can leverage it by selling to these buyers when basis improves or prices rally. This eliminates the need to haul and unload at a busy elevator during harvest.
Reduce Logistics: On-farm pickup eliminates the time and fuel spent trucking grain, allowing you to optimize your labor and equipment.
Access Specialized Markets: A broker can connect you to niche buyers you may not know about, opening up new opportunities for specialized crops or specific quality grades.
To succeed with this approach, you need to be a market manager, not just a seller.
Know Your Costs: Accurately calculate your cost of production, including variable costs like fuel and labor for hauling to different locations.
Monitor All Bids: Use market apps and subscription services to track cash bids and basis offers from every potential buyer in your region daily.
Manage Logistics: Understand your trucking capacity, delivery windows, and storage capabilities. A great price is useless if you can't get the grain there on time.
Embrace Contracts: Use a mix of cash sales, basis contracts, and futures contracts to mitigate risk and lock in profits.
By strategically selling to a diverse portfolio of buyers, you transform your grain from a simple commodity into a valuable asset that you can market for maximum profitability.
FBN supports producers with multiple grain marketing services, including:
The FBN app can help you make data-driven decisions for your ag operation. In the Markets section of the app, you can:
Monitor your preferred cash markets
Chart basis history and seasonal trends
Calculate the best selling locations based on your storage and trucking costs
Stay current on grain market news
Implement your crop marketing plan with confidence by signing up for FBN’s Market Advisory Essentials, where you’ll gain access to grain market insights, recommendations, and alerts. Get matched with a personal risk management advisor through Market Advisory Pro to receive customized strategies for your operation based on your risk profile and goals, a weekly visualized risk report, a market newsletter, a customized basis tearsheet, and text market updates.
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