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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
  • 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.