It all starts with Perfect Competition
The producers of corn and soybeans operate in a perfectly competitive marketplace. Each competitive firm in this environment is a "price taker" that can exert no influence over output prices. The characteristics that make up a perfect competitive marketplace are:
To learn more about perfect competition, I would suggest the book Principles of Agricultural Economics by Andrew Barkley and Paul W. Barkley.
Evaluate your success on how well you followed your plan, not just on results. You can control the decisions you make, you can't control the market.
The Heat Map Marketing Strategy
A Grain Marketing Plan
Over the last 25 years, I have gained a great deal of experience in the agricultural commodity industry. I have witnessed market conditions in numerous areas of agriculture, from beef and pork processing, feeding livestock, to personally trading livestock and grain futures. This knowledge has taught me that the markets are driven by human behavior and events, both of which are unpredictable and create uncertainty in agriculture.
With that said, I believe that the users and producers of commodities give good insight into their fundamental view of the current market conditions. Therefore, I developed my model based on their activity in the market. The Heat Maps are a mechanical indicator that visual displays the hedging activity by the users and producers of a commodity and its price. This visual analysis provides strong indication of supply and demand, price equilibrium, and potential market behavior in a way that is unique and easy to decipher.
My model is not a guarantee and will not always be 100% accurate. However, I do believe that it provides a process and a plan, that over time, will allow the producer of commodities to achieve above average prices.
Chris Benson is the founder of The Ag Fix and Director of Applied Agriculture and Food Studies at Morningside College in Sioux City, Ia. Chris has 25 years of experience in the red meat production, livestock, grain and futures markets.