Grain Selling 101
To have success in Agriculture, several variables have to work in your favour, but weather and the markets are the two most important factors. Weather is out of our control, BUT we can control how we market our grain. There are several key things you can do to help, and some are very simple.
There are currently more grain companies than ever competing for your product. However, a producer should focus their attention on fostering relationships with buyers who have helped them in the past and someone whom they can trust.
Grain buyers are one of the most useful “free” tools available to farmers.
Grain buyers are kept aware of market conditions by traders and brokers on an hourly basis. As a result, they can help farmers identify future trends and offer advice on marketing their grain. Some grain buyers also trade grain directly and have access to many different domestic and overseas markets. There are many pitfalls associated with international trade, so it is best to work with companies with experience servicing those markets. For financial security, only sell your grain to companies who are bonded by the Canadian Grain Commission.
Grain buyers have many resources and contacts, but they will need to know some of the following basic information to properly evaluate the grain and determine the most suitable and profitable markets for your product:
1.) Type of Grain: Cereals, pulses, oilseeds, etc. Also, advise the buyer if your grain is organic or conventional.
2.) Variety of grain: Some grain varieties have multiple markets (malting, feed, milling, etc.) Certain varieties of grain are only bred for one application.
3.) Bushel weights of grain: It is best to use “grams per 1/2 litre” because everyone uses different scales. In addition, most grain buyers have all the necessary equipment and will test your grain for free.
4.) Moisture: It is important to have “dry” grain. All grains have different “dry” points, and it is vital to know these for both storage and marketing. Tough grains cannot be milled and will spoil or heat sooner than “dry” grains. Most grain buyers have all the necessary equipment and will test your grain for free (noticing a trend here).
5.) Representative samples: Do you have a good representative sample of your total crop or just something you grabbed from one-grain bin door??? Improper sampling can lead to your grain being improperly designated and potentially cost you money.
6.) Quantity: Some grains are more difficult than others to determine proper volume. Never offer to sell more grain than you have!
If in doubt, advise the buyer of your uncertainty and determine what procedures to follow to ensure you can deliver the correct amount of grain. Some companies penalize for short deliveries, SPSeed does not. Also, determine if the “buyer” will accept grain overages and at what price (spot or contracted)? If you are forward contracting, it is advised never to sell more than 25% of your projected harvest.
7.) Bins & Grain Storage: Ensure that your bins are properly labeled and identify which field(s) the grain was harvested. If some of the grain is “tough” or “off-grade,” it should be binned separately. If you mix all the grain into one bin, you can easily downgrade good grain to feed levels and potentially lose thousands of dollars in the process. If the grain will only be available “off-combine” or in a pile on the ground, the buyer needs to know. Cleaning up grain piles or temporary storage should always be your priority.
8.) Price/Contracts: Give the buyer a target price so they can automatically include you in any future buying plans. Some companies allow you to sign a grain purchase order (GPO) that is automatically triggered if the grain reaches a certain price. Many grain buyers “group” producers together based on target prices or quality. Also, indicate if you are flexible on price. There are stories of grain not being purchased because of a $0.02 - $0.05 per bushel difference; don’t miss the boat!!!
Several types of contracts are available to producers nowadays (Fixed, Basis, Futures, etc.). Discuss your goals with your buyer or grain marketer to ensure they understand your needs.
9.) Communication: Stay in regular contact with the buyer, particularly if a large contract has been indicated. Also, please give the buyer valid telephone numbers where they can contact you on short notice. Some trade deals happen quickly, and a buyer will need to get hold of you immediately to secure any grain purchases. This is particularly important during volatile market conditions like we have been experiencing in recent months. Many large contracts can be filled in only a few hours if the price is right.
Grain marketing is a year-round activity, and following some of the above guidelines will help ensure maximum value for your grain. Our “Grain Buyer” is Chris Newberger. Chris has more than 25 years of Agricultural experience and can be reached at Stony Plain Seed Cleaning Association: 780-963-2581 or by email at email@example.com.