Logic-Based Grain Marketing
At AgPerspective, we follow the method of Logic-Based Grain Marketing.
Key Features Include:
Not Speculative - belief in Efficient Markets
Farmer Specific
Data-Centric - focused on Relevant Data
Use of data analytics to model risk (much like an insurance company models risk)
Efficient Markets
The efficient market theory states that prices reflect all information and consistent alpha generation is impossible.
Alpha (a) is a term used to describe a strategy’s (or strategist’s) ability to beat the market or gain an “edge.”
Farmer Specific
Marketing Strategy must account for the uniqueness of each farmer.
Examples of individual factors impacting marketing:
Financial metrics - balance sheet, breakeven, cash flow needs, etc.
Production history
Storage capabilities
Risk tolerance
Data-Centric
Relevant Data:
Breakeven
Type of insurance
Current hedge positions
Time of year
Probabilistic outcomes (derived via data science)
Non-Relevant Data (difference between relevant and significant)
Weather forecasts, USDA reports, Geopolitics, Expert predictions, etc.