Before you
decide to sell or store, make sure that you have decided on the right price and
know the market’s movements. Here are five steps to help you properly plan.
decide to sell or store, make sure that you have decided on the right price and
know the market’s movements. Here are five steps to help you properly plan.
Step 1: Determine your production costs
Analyse
the cost of production and make sure that you have covered your operating costs. Look back on your previous year’s income
statement and expenses to determine your production costs.
the cost of production and make sure that you have covered your operating costs. Look back on your previous year’s income
statement and expenses to determine your production costs.
Step 2: Determine the right price
Determine
the break-even price for each commodity by estimating the production costs for
each crop. Divide total cost of each crop by the expected yield. Your selling
strategy should be geared towards selling above the break-even level.
the break-even price for each commodity by estimating the production costs for
each crop. Divide total cost of each crop by the expected yield. Your selling
strategy should be geared towards selling above the break-even level.
Step 3: Keep an eye on market development
Get
familiar with the indicated price direction for your commodities. Factors
affecting the market today may not affect the market tomorrow so make sure that
you monitor the market and the price changes.
familiar with the indicated price direction for your commodities. Factors
affecting the market today may not affect the market tomorrow so make sure that
you monitor the market and the price changes.
Step 4: Plan sales according to cash flow
Dependent
on your financial obligations it might be necessary to take grain to market or
to store it. For example, in time of low prices stock can be stored until the
market moves and prices have increased. Storage costs should also be taken into
consideration.
on your financial obligations it might be necessary to take grain to market or
to store it. For example, in time of low prices stock can be stored until the
market moves and prices have increased. Storage costs should also be taken into
consideration.
Step 5: Make adjustments where necessary
Flexibility
is essential for a successful market planning. This could mean offsetting a
position previously taken in options that was later determined to be a poor
position, or seeing a transaction through from decision to conclusion.
is essential for a successful market planning. This could mean offsetting a
position previously taken in options that was later determined to be a poor
position, or seeing a transaction through from decision to conclusion.
