What is in this article?:
- Most wheat sold in top one-half of market
- 10-year period
- Most wheat farmers sell in the bottom one-third of the market. This myth has been repeated often enough over the years that some producers believe it.
The Illinois study covered a 10-year period, 1995 through 2004. If the producers had sold all the wheat at harvest, the average price received would have been 9 cents higher than the farmers actually received. The Illinois study is part of the AgMas project.
An additional lesson from this study was that selling wheat at harvest may generate a few cents per bushel more when compared to other strategies. However, if the wheat was consistently sold between April 1 and Jan. 1, the average price received from most strategies was not significantly different.
"It did not make any significant difference when wheat was sold as long as it was sold by Jan. 1."
The one strategy that normally does not work is leaving wheat in storage and hedging the wheat using the Kansas City Board of Trade December wheat contract to protect the price (storage hedge).
Over time, the storage hedge produced a significantly lower average price than other marketing strategies that had all the wheat sold by Jan. 1.
Other research studies support the opinion that wheat producers do a relatively good job of selling their wheat. Research also shows that “of all management tasks, producers think that marketing is one of their weakest points.” This is probably not the case.
Research indicates that producers should develop marketing strategies that fit, timing income when it is needed.
The limiting factor is that the wheat should be sold before Jan. 1, after harvest.
The research also shows that, over time, selling at harvest tends to be the simplest way to sell wheat and produces an average price that is at or near the top average for any strategy.