Using Limit Orders to Strengthen Your Grain Marketing Strategy
Nov 29, 2024
By Nathan Flores and Ashley Hoffman, GCC Grain Origination Team
It’s simple: Put in an offer and use limit orders as a tool to sell a set bushel amount from your current commodity balance or for future delivery at a predetermined price. This allows producers to lock in a specific price when the market reaches the desired level, versus waiting and watching the market. For example, you could put in an order to “sell 5,000 bushels of new crop corn if it reaches $5.00 cash” or to “sell all open storage wheat at $6.00 cash.” It's important to note that these orders require active management and are not a "set-it-and-forget-it" strategy. However, they can be a valuable tool in any grain marketing plan.
Here are some helpful tips to keep in mind when using limit orders:
- As the day session ends, limit orders allow a producer to participate in overnight market trading.
- A key advantage of using limit orders is the ability to price grain at desired levels even in rapidly changing market conditions.
- Ability to put target pricing and goal setting into action.
- Means of accountability to market bushels at prices according to a marketing plan.
- If the producer sells the grain before the order has been filled, they need to let the grain buyer know to cancel the limit order.
It's crucial to bear in mind that limit orders, like any other marketing strategy, come with their own set of requirements and risks. They are not the same as selling grain in real-time and are not guaranteed to be filled. Sellers can cancel orders or set an expiration date. It's important to remember that basis and futures risk still exists until a contract is finalized. However, limit orders can be a valuable asset in your marketing plan.
Connect with your GCC Grain Origination Team to see how limit orders can support your marketing goals.