Ballarat Farm accountants understand the grain market

General News: 02/06/2017

What’s the difference between a grain marketer and seller?

Think they’re the same thing? You’re wrong. Read on.

With limited ability to influence the market and differentiate when trying to market a bulk commodity we must look to other strategies to increase farm business profitability.  (Production x Prices)- Expenses= Profit; as the producers, there are three opportunities to review profitability, production, cost and price.

Mulcahy and Co farm accountants know profitability

Sow.. If majority of us are sellers, what do we need to know to do it well:

  1. Know how much you have to sell
    Review your properties historic grain production results
    Don’t forward sell everything; adjust for seasonal risk appropriate to your location
  2. Know your cost of grain production
    The cost of producing 1 tonne of grain is sensitive to seasonal conditions and will vary year-year
    Understand what the range of costs could possibly be (high vs. low production)
    Develop a Target Price Strategy for your specific business
  3. Know the market
    Consider using decile tables to help estimate prices for season and to understand the variation
    Consider what is happening in the northern hemisphere- understand the trends
  4. Know the opportunities you have to sell grain
    You have the opportunity to sell grain up to 24 months prior to harvest or 12 months’ post (Physical contracts, Swaps, Cash, Grain Pools, Store @ silos, Store on Farm; use a variety of methods)
    Remember to balance the price with the delivery requirements and storage costs
  5. Know the risk
    Understand how your grain selling options operate
    Identify the periods of where cashflow is needed and match to your selling timing

The concepts that surround both marketing and selling are incredibly important to understand when thinking about your grain. Mulcahy and Co farm accountants are experienced in how to use these techniques in combination, which can help your business to become a leader instead of a follower, thus providing good financial returns.

Mulcahy and Co farm accountants understand the key to profitability. Partnerships with Xero and Figured cloud based technology, allow you to make well-informed decisions that will be of financial benefit to your business.