C Magazine - Spring 2018

Marketing Cruise Control

Annette Bertelsen 2018-04-21 07:42:12

"Busy” doesn’t begin to describe Mike Sunderman. He farms 2,000 acres, runs a financial services firm and finds time to coach his daughter’s basketball team and pitch in with other community service. So it’s no surprise that the task of marketing his grain sometimes takes a backseat to other priorities.

“It’s hard to find time to focus on marketing when fieldwork and other responsibilities are top of mind, even though I really enjoy marketing and looking at the fundamentals,” says the New London, Ohio, grower.

24% of growers use managed pricing

Source: 2017 survey, Farm Credit Services of America

To ensure success, he partners with Sunrise Cooperative based in Fremont, Ohio, for grain marketing and inputs. Working together, Sunderman and the Sunrise Cooperative team create plans that take advantage of **several marketing tools. “Over the last 10 years, the co-op has brought significantly more tools to its members. It’s no longer just forward contracts or hedge-to-arrive contracts,” he says.

17% of growers have written marketing plans

Source: 2017 survey, Farm Credit Services of America

He markets about 15 percent of his corn and soybean production through CHS Pro Advantage, a managed futures program that lets growers leverage the commodity pricing expertise of Russell Consulting Group and CHS Hedging, the commodity brokerage subsidiary of CHS.

“CHS Hedging manages a portion of my risk for me,” Sunderman says. “It’s like using cruise control on a car. Pro Advantage makes sense. I can relax and trust it.”

As part of a diversifi ed risk management strategy, Sunrise Cooperative generally recommends farmers put 10 to 20 percent of their crop into managed pricing products like Pro Advantage, says Mike Myers, grain solutions advisor.

“It takes a leap of faith, but most growers appreciate the value they get from managed products,” says Myers.

“Regardless of how engaged you are in marketing, the CHS Pro Advantage program helps you market at a higher level by leveraging the expertise and professionalism of the CHS team. They provide a comprehensive monthly report with a lot of transparency that helps farmers evaluate their entire position, beyond the bushels managed by CHS,” says Myers.

For Sunderman, it’s akin to having a mutual fund manager handle a portion of his investments.

“You’ll always worry the price could go up after locking in a contract. That worry can cause you to end up selling for a lot less. That’s why I allocate responsibility for some of my bushels to somebody who doesn’t have an emotional tie to decision-making. It helps me manage my risk,” he says.

“The bottom line is that CHS Pro Advantage has worked very well for me,” says Sunderman. “I’m glad I don’t need to go outside the cooperative system for this marketing platform. I prefer doing business with a company I own.”

PRO POINTS

With CHS Pro Advantage, a grower pledges a number of bushels and a delivery destination. The grain is priced by commodity professionals at CHS Hedging/Russell Consulting Group. Settlement price is based on the performance of futures and options hedges traded by the professionals. Basis decisions remain with the grower, and a price-out option is available any time during the pricing period.

LEARN MORE: Visit chsproadvantage.com for more information, including pricing and enrollment periods.

Published by CHS Inc. View All Articles.

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