As I write this article, it appears that many producers are going through the "fear" stage of marketing. That stage is normally the last downward leg in a bear market and typically results in an exhaustion bottom - where the market exhausts all selling interest.
There are many misconceptions, half-truths and, unfortunately in many cases, a lack of knowledge of how markets work. Here are factors in the decision-making process:
* Know which direction prices are headed. While knowing the major trend is important, having a strategy for specific market situations is more important.
For example, subscribers to The Brock Report were advised on Dec. 7 and 8 to forward contract all remaining soybeans for March delivery. The loan deficiency payments (LDPs) weren't collected until the last week in February. The net selling price (including hedge profits) was $7.05/bu. For those who did the strategy in reverse and collected the LDPs early and sold the soybeans late, the net selling price would have been about $5/bu.
* Remember that greed, hope and fear still impact major decisions. During the greed phase we have the tendency to "underreact." In the hope phase, we're merely hoping the market will get back to where it was last week, and still can't make a decision. During the fear stage, we have a tendency to overreact, and make too many decisions - in most cases, bad ones. That's where the grain markets were in the month of March.
* Look at your decision-making environment. This is the least discussed aspect of marketing and yet one of the most important. Some may think this applies only to large corporations. It doesn't.
What I'm referring to is how decisions are made and who can second-guess these decisions. For example, one of the biggest decision-making issues facing producers this year is that they can't forget the mistakes made last year.
You must be able to put mistakes behind you and not worry about who will second-guess your decisions. Whether it be husband and wife, father and son or brothers farming together, the process of how decisions are made must be faced head-on or the ultimate mistake is made - no one makes a decision.
Parting thoughts: Marketing takes time and emotional balance. Some people have the background and talent to balance these two successfully. Some people never will. Marketing is one of - if not the most - important aspects of your business. In critical financial times, such as we're facing now, many producers need to evaluate whether they can market on their own. As in the case of many specialized businesses, you may need to decide whether an outside advisor may be worth the investment.