Incorporating spatial grain price information in marketing plans a minnesota example
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Incorporating Spatial Grain Price Information in Marketing Plans: A Minnesota Example. Ward E.Nefstead Associate Professor& Extension Economist University of Minnesota. Brief History- Market Price Information. Print media: *Newspaper- futures and local price information

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Incorporating spatial grain price information in marketing plans a minnesota example

Incorporating Spatial Grain Price Information in Marketing Plans: A Minnesota Example

Ward E.Nefstead

Associate Professor& Extension Economist

University of Minnesota


Brief history market price information
Brief History- Market Price Information Plans: A Minnesota Example

  • Print media:

    *Newspaper- futures and local price information

  • Data Transmission Network(Scoular grain)- high FM band transmission to elevators/ vendors


Farm newsletters
Farm Newsletters Plans: A Minnesota Example

  • Kiplinger Ag Letter

  • Pro Farmer

  • Brock & Associates

  • Others-FGL,etc.

  • * These provided advice plus information


Market information history
Market Information History Plans: A Minnesota Example

  • Radio

  • * College station ISU- futures price broadcast/ updated on the hour

  • * WHO ( Worthington,MN) –updated information

  • * WCCO- update several times/day


Dtn extends to farms
DTN Extends to Farms Plans: A Minnesota Example

  • DTN developed network to sell to farms

  • Captive terminals allowed selective distribution of content

  • Additional pages could be added such as newsletters/ local price information


Research in marketing information grain marketing
Research in Marketing Information/Grain Marketing Plans: A Minnesota Example

  • U. of Minnesota- Rob King/ W. Lazarus/Stan Stevens

  • Marketing club software/ option-based futures projection

  • Annual market price outlook- fall


Farm market advisory research
Farm Market Advisory Research Plans: A Minnesota Example

  • First Nat’l Bank-Bloomington, Ill.- 1970’s

  • AgMAS project- U. of Illinois

  • Merrill Lynch- Chicago office-futures marketing plan based on advisory information


Early grain basis research
Early Grain Basis Research Plans: A Minnesota Example

  • W. Anthony( U. of Minnesota)- used Mpls terminal prices minus a transportation differential to estimate local basis

  • Charting and basis charts prepared by marketing clubs- some Adult Farm Mg’t

  • Manual charts became computer-based with the advent of microcomputers and spreadsheets


Internet influence on grain price information
Internet Influence on Grain Price Information Plans: A Minnesota Example

  • DTN moved information to internet site

  • Real time or delayed information now fed to receiver

  • Website development fosters unique collection and presentation of information


Websites featuring grain price information analysis
Websites featuring grain price information/analysis Plans: A Minnesota Example

  • Farms.com

  • AgDayta.com

  • Other sites- FarmDoc(U. of Illinois) regional basis in Illinois, supply-demand historic information,other

  • Newer sites- W. Nefstea/faculty website- regional basis in Minnesota, decision aids


Access to local grain price information
Access to Local Grain Price Information Plans: A Minnesota Example

  • Creation of National Corn and Soybean Indices- by Minneapolis Grain Exchange.

  • Indices are used for hedging,etc

  • Data collection on spot elevator prices by DTN


Early spatial price maps
Early Spatial Price Maps Plans: A Minnesota Example

  • W. Nefstead/Kurt Collins- U. of Minnesota- 1998

  • Used UROP grant to purchase spatial software & project maps based on data.

  • Paper presented at AAEA meeting on nature of local grain price distributions and incorporation of sampling from distributions in marketing plan spreadsheets


Spatial grain price projects
Spatial Grain Price Projects Plans: A Minnesota Example

  • K. McNew- Montana State U.- publication of monthly spatial maps based on NCI/NSI/Other data

  • K. DuyVetter- Kansas State U.- AgManager series shows monthly basis maps and projections for multistate area

  • B.Babcock- Iowa State University- added maps on CARD


How to use spatial price information
How To Use Spatial Price Information Plans: A Minnesota Example

  • Corresponds to dilemma in precision agriculture- how do we use field maps

  • Precision-based marketing is a refinement of basic marketing plans

  • Spatial price variation affects “ where” and “when” to sell


Spatial price information decisions to sell
Spatial Price Information Decisions to Sell Plans: A Minnesota Example

  • “where” to market- spot sales- will generate a return over transportation costs in excess of $.17 per bu on corn and $.23 per bu. On soybeans. Faculty website-Wnefstead contain weekly maps and transportation algorithm plus spreadsheet marketing plan software.


Spatial price information also affects when to sell
Spatial Price Information also affects” When” to sell Plans: A Minnesota Example

  • Price maps show basis changes over time by local area so storage decisions/ hedging/forward contracting decisions are also affected.

  • Basis maps show relationships to flat price series. Higher prices have shifted to different areas of the state.


Commercial products related to spatial prices
Commercial Products Related to Spatial Prices Plans: A Minnesota Example

  • AgDayta has experimental program-called Optimizer

  • Internet-based marketing plans are also available from the same vendor and in beta form elsewhere


Case farm sw minnesota
Case Farm-SW Minnesota Plans: A Minnesota Example

  • Near Marshall, Minnesota

  • 300 acres- 150 used for corn; 150 used for soybean production.

  • Expected crop production- 2004- 12,000 bu. Corn and 4,000 bu. Soybeans

  • Prices view in 45 mile radius.

  • Price variation within area- $.48 corn and $1.18 soybeans.


Case farm example
Case Farm Example Plans: A Minnesota Example

  • Net gain of $5700 for corn and $4720 for soybeans on this farm

  • This gain is the result of increased spot and delayed delivery prices.

  • The software consisted on website and spreadsheet-based decision aids.


Future research and programs
Future research and programs Plans: A Minnesota Example

  • Modification of mechanical marketing strategies to incorporate price forecast and spatial data

  • Refinement of spatial price information to include other delayed prices.


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