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Future Grain Marketing Limitations

Matt Roberts
Educational Opportunities: 
Home > Education & Events > June 2018 > Future Grain Marketing Limitations

My name's Matt Roberts, and I'm the founder of The Kernmantle Group in Columbus, Ohio. Today, I want to talk just a little bit about some economics that matters to marketing. It's not just economics for its own sake. When I teach marketing classes, the first principle of economics I want students to walk away with is the idea that futures markets are really efficient, and what that means.

Everybody has heard of efficient markets, and it sounds technical, but basically, all it means is that it's not easy to make a lot of money just trading futures. Just trading futures doesn't really provide a service to the economy, so you're not going to get compensated for it. And the reason that matters is, you need to understand that you're not going to get compensated and it's really hard to make money doing it. Most marketing plans and most farmers, when they think about marketing, their thoughts are all about futures. And asking themselves, how do I trade more?

This is an area where I think the combination of auto-steer and cellphones are just toxic for good marketing, because farmers can just sit and look at prices and obsess over them. However, good marketers aren't worried about day-to-day, moment-to-moment prices. They build a marketing plan. They focus on the big picture, and they realize their limits, and their limits are not trading.

If you can make money trading in the futures markets, farming becomes totally optional. You would no longer have to farm. Instead, the real truth that comes out of knowing that is you're not going to make money just trading futures. But rather you need to spread sales out. You need to have a marketing plan that forces you to have certain quantities of bushels sold by certain points in time, to prevent you from falling into this idea that you know better than the market. Or that you can out-time the market, and, therefore, you're going to just save your bushels until you know you hit the right price.
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