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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

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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

  • Print media:

    *Newspaper- futures and local price information

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

Farm newsletters

Farm Newsletters

  • Kiplinger Ag Letter

  • Pro Farmer

  • Brock & Associates

  • Others-FGL,etc.

  • * These provided advice plus information

Market information history

Market Information History

  • 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

  • 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

  • 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

  • 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

  • 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

  • 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



  • 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

  • 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

  • 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

  • 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

  • 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

  • “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

  • 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

  • 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

  • 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

  • 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

  • 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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