I believe that decision dates are critical to grain marketing. They turn a simple marketing plan into a real plan for action. What are decision dates and how do they work?

Last month, my column reviewed the task of establishing price objectives. Before harvest, I suggested a minimum price objective consistent with your cost of production. With higher corn targets ramping up in 25-30 cent increments, your price objectives soon look lofty and unrealistic. This is the role of decision dates in marketing – they address the issue of “too high” price objectives.

A decision date is a date when you commit to making a sale, even if you don’t reach a price objective. Before harvest, decision dates encourage sales as long as the price is above your minimum price objective. After harvest, decision dates help you avoid the pitfall of holding grain in storage too long.

Here’s how it can work

Let me illustrate how a decision date can work before harvest. Assume you have a minimum price objective of $4.10 December corn futures. In early April, for example, Dec corn reaches $4.10/bu. and you make your first sale. Your next price target is $4.40/bu., and this target is tied to a May 5 decision date (every price objective should also have a decision date). May 5 arrives. The Dec contract, currently trading at $4.27/bu., never reached your $4.40/bu. objective. What should you do?

Related:Setting price targets

Make the sale! You reached a decision date and your pricing opportunity is above your $4.10/bu. minimum. Are you serious about pricing grain before harvest? The decision date keeps you moving forward. It turns your marketing plan into a real plan for action.

Let’s look at a decision date after harvest. At harvest, you put $8.50 soybeans in storage, hoping to sell at $9.50/bu. or better. It’s good to have a price target, but you also add a June 15 decision date. After all, you don’t want to hold too long, as price trends from early summer to harvest can be cruel. If your lofty price goal is not met, respect the decision date. Again, it turns your marketing plan into a real plan for action.

To help you understand the importance of decision dates, I need to tell you about the simplest marketing plan ever suggested to me. In the early 2000s – a time when $2 corn was common – a producer shared his marketing plan. He said, “As soon as the cash price of corn reaches $3 per bushel, I will sell everything!” Seated next to him was his wife, who added, “… and that’s why we have three years of corn stored on our farm.” Rather than being a plan for action, $3 corn became an excuse for doing nothing.

Related:How to write a pre-harvest marketing plan

Focus on seasonal patterns

Now that you understand how they work, when is the best time to use decision dates? The answer is simple, and found in seasonal price patterns. These patterns point to spring and early summer –April, May and June – as the best time to price grain. I suggest you spread your decision dates throughout this period.

You might avoid days of the week when you feel that your local market is less aggressive. However, I pay no attention to key market reports release dates – they can be bullish or bearish. Just spread them out and commit to using them when they arrive.

Price targets are important and necessary, but the market does not always cooperate with our high hopes. Decision dates turn your marketing plan into a real plan for action.

Edward Usset is a Grain Market Economist at the University of Minnesota, and author of the book “Grain Marketing is Simple (it’s just not easy).” You can reach him at [email protected].

Read the other articles in the Advanced Marketing Class series: