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MarketEdge 12/18/08 1:10:49 PM
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MarketEdge is a marketing plan designed specifically for an individual enterprise that establishes realistic price objectives and manages price risk. Marketing grain is a very difficult and humbling experience, there is a 50% chance that the decision to sell will be wrong. Following a disciplined marketing plan may not make the decision right, but if the decision is based on the guidelines set forth in the plan, then the price objectives are being met and you are achieving your desired results. Some of the most challenging management judgments that grain producers face involve decisions about when and how to market grain. At any one point in time, changes in supply and demand numbers and subsequent price trends are difficult to predict. The continued uncertainty about price trends serves to emphasize the need to develop grain-marketing strategies with target based price goals and contingency plans. Without preset price goals based on financial needs or some other farm business planning principle, grain producers are vulnerable to making marketing decisions based on short-term market trends, perceptions and emotion. It is important that this plan is well coordinated with your lender and everyone that has a vested interest in your operation. Security agreements with a specific hedge account and line of credit has proven invaluable in successful marketing plans. The market place for corn and soybeans is in the midst of the biggest change since the unit train came on the scene in the 70*s and 80*s. Ethanol plants and bio-diesel plants are changing the price structure and basis levels throughout the upper Midwest. This trend is turning unit train terminals into residual storage facilities for the ethanol plants. Most producers will have several market outlets for their crops. Once all the plants are up and running basis levels will strengthen and certain areas will see price spikes as the plants cover their inventory needs. The producer that is positioned for these changes will see some real price benefits.
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