Grain trading is risky. Often, Irish farmers don’t participate in trading throughout the year and take the harvest price. In some ways, this seems like missing out on an opportunity to sell at a higher price, but in recent years it has paid off for many as markets moved higher as the year went on. Traditionally, harvest time would offer some of the lowest prices of the year.
For those thinking of getting more involved in the markets and forward selling their grain, here are some top tips.
1: Scott said that you need to understand the game. In these large global grain markets, your opponents in the game are extremely well capitalised, he said.
“They have huge flows of information and you have to ask yourself what’s your edge versus those opponents in the game?”
Scott said that you need to think very hard to see if you have some kind of edge in that game.
If you don’t, then Scott explained that your best strategy is probably to spread your sales to try and diversify out some of your price risk. He commented that you wouldn’t enter a million-dollar poker tournament in Las Vegas if you’re an average poker player.
2: Do you have the stomach for the inevitable ups and downs in the game? Scott explained that some farmers struggle with grain marketing as they don’t have the personality of a good trader.
You need a cool personality, and to be able to let go of your marketing mistakes.
Can you handle the emotional ups and downs in the game of what Scott calls “beat the market”?
3: Have realistic goals. Scott, who is still in charge of the trading, along with his mother, on the family farm in Iowa said it’s really important to have realistic goals.
“If I am really successful I think I might, in the long run, achieve a price 5% to 10% higher than our neighbours back in Iowa, that’s it. Do not expect miracles. It’s just too hard.”
