Developing a Marketing Plan - PDF Free Download

Developing a Marketing Plan Frayne Olson, PhD Crop Economist/Marketing Specialist frayne.olson@ndsu.edu 701-231-7377 NDSU Extension Service ND Agricultural Experiment Station Dept. of Agribusiness & Applied Economics STUDENT FOCUSED LAND GRANT RESEARCH UNIVERSITY

Key Considerations in Marketing Plan What is my main objective? Achieve the highest price possible. Sell for more than my neighbor. Achieve a targeted profit margin. Manage price risk. What are my cash flow needs? Are there grain storage limitations? Are there tax planning considerations?

Mechanics of a Marketing Plan Set price objectives. Set timing objectives. Choose the correct marketing tool. Monitor market conditions. Update or modify when needed. Implement!! (Pull the trigger)

Setting Price Objectives Know your cost of production! Fundamental Analysis Evaluate Supply and Demand Conditions USDA WASDE Reports (World Agricultural Supply and Demand Estimates) Use reports from private analytical firms Hire a marketing consultant Technical Analysis Charting techniques Basic analysis free on webpages Hire a marketing consultant

Fundamental Analysis

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. 14,216 Mill. Bu. is the second record corn crop in a row! (2.8% increase) Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

What is the new U.S. trend line yield? 170 160 150 Bushels /Acre 140 130 120 110 100 90 80 Average Yield Outlook Trend Line November 10, 2014 WASDE Feed Grains Data Base Table 1

What is the new U.S. trend line yield? 170 160 150 Bushels /Acre 140 130 120 110 100 90 80 Is 173.4 bu/a possible? Is 173.4 bu/a reasonable? Average Yield Outlook Trend Line November 10, 2014 WASDE Feed Grains Data Base Table 1

What is the new U.S. trend line yield? 170 160 150 Bushels /Acre 140 130 120 110 100 173.4 bu/a is 7.8 bu above trend line. Average Yield Outlook Trend Line 90 80 2009 = 10.6 bu above 2004 = 16.1 bu above 1994 = 14.2 bu above 1992 = 11.0 bu above November 10, 2014 WASDE Feed Grains Data Base Table 1

Corn Total Use (Billion Bushels) 7.00 6.00 Billion Bushels 5.00 4.00 3.00 2.00 1.00 Feed & Residual Ethanol Non Ethanol Food, Seed & Industrial Exports 0.00 Jan. 12, 2015 WASDE Report & USDA Feed Grains Data Base Table 4

Corn Supply & Demand Table Feed & Residual is forecast to increase 4.7%. U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. How fast will livestock numbers increase and what impact will slaughter weights have? Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

Corn Supply & Demand Table Both Ethanol and other Industrial use are forecast to increase slightly. U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Expansion is possible if exports expand. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

WTI Crude Oil DTN Prophet X 02 02 15 pm

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Exports are forecast to decrease 8.7% due to strong world competition and large feed wheat supplies. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Export pace should be watched closely for price direction! Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 World Corn Exports (1,000 Metric Ton) November 10, 2014 WASDE Report & USDA Feed Grains Data Base Table 4 1970/1971 1972/1973 1974/1975 1976/1977 1978/1979 1980/1981 1982/1983 1984/1985 1986/1987 1988/1989 1990/1991 1992/1993 1994/1995 1996/1997 1998/1999 2000/2001 2002/2003 2004/2005 2006/2007 2008/2009 2010/2011 2012/2013 2014/2015 Brazil Argentina Ukraine United States

Top Six U.S. Corn Export 18,000 Destinations 16,000 14,000 1,000 Metric Ton 12,000 10,000 8,000 6,000 4,000 2,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Japan Mexico South Korea Colombia China Taiwan USDA Quick Stats Custom Query

U.S. Dollar Index DTN Prophet X 02 02 15 pm

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Corn Ending Stocks are forecast to be almost as large as the TOTAL U.S. WHEAT PRODUCTION (2,026 Mill. Bu.) Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

Corn Supply & Demand Table U.S. Corn 2012/2013 2013/2014 (est.) 2014/2015 (Jan) Planted A. 97.3 Mill. A. 95.4 Mill. A. 90.9 Mill. A. Harvested A. 87.4 Mill. A. 87.7 Mill. A. 83.1 Mill. A. Yield/Harvest A. 123.1 bu. 158.1 bu. 171.0 bu. Begin Stocks 989 Mill. Bu. 821 Mill. Bu. 1,232 Mill. Bu. Stocks to Use Ratio is forecast to increase from 9.1% to 13.8%, almost double 2012/13. Production 10,755 Mill. Bu. 13,829 Mill. Bu. 14,216 Mill. Bu. Imports 160 Mill. Bu. 36 Mill. Bu. 25 Mill. Bu. Total Supply 11,904 Mill. Bu. 14,686 Mill. Bu. 15,472 Mill. Bu. Feed & Residual 4,315 Mill. Bu. 5,036 Mill. Bu. 5,275 Mill. Bu. Food, Seed, Ind. 6,038 Mill. Bu. 6,501 Mill. Bu. 6,570 Mill. Bu. Ethanol 4,641 Mill. Bu. 5,134 Mill. Bu. 5,175 Mill. Bu. Exports 730 Mill. Bu. 1,917 Mill. Bu. 1,750 Mill. Bu. Total Use 11,083 Mill. Bu. 13,454 Mill. Bu. 13,595 Mill. Bu. Ending Stocks 821 Mill. Bu. 1,232 Mill. Bu. 1,877 Mill. Bu. USDA WASDE January 12, 2015

15.0 14.0 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 Corn Total U.S. Production & Use (Billion Bushels) 0.50 Stocks to Use Total Production Total Use 0.45 0.40 0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 Billion Bushels 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Stocks to Use Ratio January 12, 2015 WASDE Report & USDA Feed Grains Data Base Table 4

Corn Price vs. Stocks/Use Ratio with Inflation Adjustment 1993/94 to 2012/13 8.50 Price per Bushel 7.50 6.50 5.50 4.50 3.50 2.50 6.89 6.33 5.40 3.94 3.00 3.95 3.44 2.95 4.56 3.79 4.40 3.48 3.47 2.56 2.73 2.32 2.48 2.44 2.48 1.50 0.060 0.080 0.100 0.120 0.140 0.160 0.180 0.200 Percent Stocks to Use Historical Price

Corn Price vs. Stocks/Use Ratio with Inflation Adjustment 1993/94 to 2012/13 8.50 Price per Bushel 7.50 6.50 5.50 4.50 3.50 2.50 6.89 6.33 5.40 4.45 3.94 3.00 3.95 3.44 2.95 4.56 3.79 4.40 3.48 1993/94 to 2012/13 adjusted for inflation; 2013 dollars 3.47 2.56 2.73 2.32 2.48 2.44 2.48 1.50 0.060 0.080 0.100 0.120 0.140 0.160 0.180 0.200 Percent Stocks to Use Historical Price Forecasted Price

Corn Price vs. Stocks/Use Ratio with Inflation Adjustment 1993/94 to 2012/13 8.50 Price per Bushel 7.50 6.50 5.50 4.50 3.50 2.50 6.89 6.33 5.40 4.45 3.94 3.00 3.95 3.44 2.95 4.56 3.79 4.40 3.48 3.47 2.56 2.73 2.32 2.48 2.44 2.48 1.50 0.060 0.080 0.100 0.120 0.140 0.160 0.180 0.200 Percent Stocks to Use Historical Price Forecasted Price

World Corn Prod, Use & Stocks/Use (Million Metric Ton) Million Metric Tons 1,000 900 800 700 600 500 400 300 Stocks-to-Use Total Production Total Use 0.60 0.50 0.40 0.30 0.20 0.10 Stocks-to-Use Ratio January 12, 2015 USDA WASDE & PSD Custom Query

World Corn Prod, Use & Stocks/Use (Million Metric Ton) Million Metric Tons 1,000 900 800 700 600 500 400 300 Stocks-to-Use Total Production Total Use Who holds corn ending stocks? China 41.6% U.S. 25.2% Brazil 9.3% 0.60 0.50 0.40 0.30 0.20 0.10 Stocks-to-Use Ratio January 12, 2015 USDA WASDE & PSD Custom Query

Technical Analysis

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