I was asked the question recently about hedge profiles and how it’s best determined.
A hedge profile is simply put, what percentage of grain is going to be sold at various times of the year.
The fact is however, that it’s a complex answer and one that needs the ability to be dynamic. After all, why would you sell, say 10%, in June if it’s not at a satisfactory price or production prospects?
That’s why any good strategy should consider these two factors and how they relate to gross revenue and profit prospects.
But beyond this, how much should we sell at any given time? If it’s a decile 10 price, your production outlook is high, and expected profit is 40% of gross revenue, how much do we sell?
That’s why the hedging model includes a confidence factor in production, requires input of cashflow requirements, and risk capacity.
A farm that’s recently expanded, has lower equity, large cashflow requirements at harvest, and lower frost risk, is going to be heavier sellers earlier in the season than the opposite.
Therefore, you shouldn’t compare marketing efforts over the fence.
In 2013, we benchmarked marketing between growers, but quickly learnt that this was unconstructive to building a better marketing plan going forward.
If you struggle to construct how much grain you should sell, I encourage you to call me on 0429 423 976 to discuss a personalised plan.