Date of this Version
This is the last in a series of six NebGuides on agricultural options and discusses "homework" needed to evaluate pricing opportunities.
The market is an ever changing dynamic force. While we recognize this, we also realize that to do a good job of marketing, we must be able to evaluate our pricing opportunities. We must be able to evaluate what the market is offering quickly and efficiently. Evaluating pricing opportunities comes from time spent doing homework throughout the year. If we have done this homework, we can listen to the grain market reports (Chicago futures) on the radio and quickly evaluate what will be the net price received.
Examples of basic homework include 1) estimated cost of production, 2) storage costs, and 3) local historical basis differentials, and outlook. In evaluating pricing strategies, we often avoid outlook because of its uncertainty. But, we must recognize outlook carries tremendous weight when a decision is made.
Producers tend to base outlook decisions on present conditions and not on what they project will happen in the future.
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