Podcast Exclusive: The Grain Marketing Ecosystem and Why FBN Jumped In
In this exclusive episode of the FBN Podcast, I’m talking with Ben Harms, head of crop marketing strategy and operations at FBN, on why we jumped into the grain marketing ecosystem, what offerings we’re bringing to farmers around their crop marketing, and how. We also talk about “making the farmer the elevator,” market intelligence powered by data and a new algorithm-based cash contract tool called FBN Index Plus.
“Marketing your grain is emotional. You're out in the field, you're growing this product, pouring your blood, sweat and tears into it. Letting it go and making the decision to actually sell it, and then physically letting it go can be pretty emotional. It requires a lot of trust. Somebody is either helping you execute that risk management sale, driving off your farm and out of your field with that product, or you're delivering that product and then hoping you get paid at some point in the very near future. A lot of that requires you to be working with people that you can rely on.”
— Ben Harms, head of crop marketing strategy and operations at FBN
Grain marketing decision making versus selling your grain
We structure our offerings into two groups, which are bucketed around how we think farmers should be approaching marketing.
On the one side, we've got a decision making phase, and that's really when you're thinking about risk management holistically, when you're thinking about when to price grain, especially your futures, along with the timing, what structures you should be using, what's going on in the markets, etc. On this side, we provide to you our data-driven market bias, actively recommending to you when we think you should be pricing grain. You can get this through our more passive Market Intelligence product, or through our Cash Grain Management program, you can get regular content and a full service advisor who's helping to distill a lot of that information down and is making active recommendations to you.
And then the second bucket that we have is the execution phase. This is when you’re ready to make the move and price that grain, whether it be through cash contracts and FBN virtual elevator opportunities, through brokerage (including the FBN Brokerage platform), or just in the cash markets.
Market intelligence powered by data
At FBN, we're doing a number of analyses geared towards making farmers more informed marketers of their grain. For example, one led by our chief economist Dr. Kevin McNew, who worked with our data science team to create the first ever basis prediction model. We collect cash market data from 4,000 to 5,000 buyers every single day, and our data science team at FBN analyzed that information and is now bringing that directly to members to let them know where we think basis prices might go over the next several months, or over the next year.
One thing farmers say to us pretty often is, “Okay, I see a lot of newsletters out there, so what is actually different about what FBN is doing.” Well, we're not using FBN member data to then turn around and trade on it ourselves. We're analyzing FBN member-contributed data and turning around providing that aggregated, anonymized data back to you with insights you can actually use. In addition, we’re looking at the market fundamentals and blending that analysis with our proprietary modeling to come up with pricing recommendations for our members.
Making the farmer the elevator
Ultimately, our goal is to make the farmer the elevator themselves. What we mean by that is empowering the farmer in a number of different ways as it relates to data, as it relates to selling options, and as it relates to connecting farmers with other farmers and gaining more control when it comes to marketing.
We do get a lot of questions about this because we are a sort of virtual player in the space. We don't have the physical assets that farmers might think of with most grain companies. But FBN is a licensed grain buyer in 35 plus states now. The reason that we are the grain buyer, and the one that you are actually contracting and selling your grain to, is that we help farmers manage their risk with flexibility while maintaining that independence from individual delivery locations.
The way that our cash contracts work is that you set your futures with FBN, whether that's through a basic hedge to arrive or something more complex, and then you deliver it where you want. You're maintaining that basis flexibility throughout the year. For example, if you're doing it off the December corn contracts, anytime between now and December, you would find a delivery location, and you'd notify us, and then we would set the basis with that elevator.
Independent selling options
Ultimately, grain buyers typically have physical assets, like ethanol facilities for example, and they play an absolutely vital and important part of the ecosystem. They're actually taking a farmer's crop and they're doing things with it that adds value, and that's what ultimately gives farmer grain value.
But, at the same time, those buyers don't necessarily have all of the same incentives as farmers when it comes to hedging or conducting risk management. They want to lock up that grain as early as possible, and quite frankly, for as cheaply as possible. So what we try to do is give farmers an independent selling option, and enable them to maintain their independence from individual buyers when they're hedging their risk. We separate out those two processes. And then, in addition, we actively support farmers when it comes to selling the physical bushel as well.
Power of the network
We also have the FBN network and the power that comes with that, like new crop opportunities, specialty varieties and helping farmers access new markets. Across the board at FBN, we’re trying to bring farmers together and aggregate their power.
Do you have questions about the FBN network? About how you can gain more choice, freedom and transparency in your farming business, and make sure the industry is working for you?
Send us your questions at firstname.lastname@example.org.
We'll answer them on the podcast. From seed industry pricing practices to simplifying the ups and downs of the grain markets, we’ll get your questions answered as best we can. It's another way we're putting Farmers First®.
FBN Crop Marketing is offered by FBN CM LLC and is only available where FBN CM LLC is licensed. We do not guarantee customers will receive specific benefits or value for participating. Results will vary and may result in loss. In addition to being an FBN member, additional terms and conditions apply to qualify for our offerings. Mobile, exchange, N-F-A, and clearing fees representing C-B-O-T grain contracts will apply. Exchange fees may vary by product. Trades executed on mobile phone will be assessed an additional 25 cents per side. Total fees per side are typically about $3.00 per side. The risk of trading futures and options can be substantial and may not be suitable for all investors. All information, publications and reports, including the specific material used and distributed by FBN BR LLC shall be construed as a solicitation. FBN BR LLC does not distribute research reports, employee research analysts, or maintain a research department as defined in CFTC regulation 1.71. This podcast contains information obtained from sources believed to be reliable, but its accuracy is not guaranteed by FBN BR LLC. Past performance is not necessarily indicative of future results. For the purposes of quality assurance and compliance, phone calls to and from FBN BR LLC may be recorded.
Purchasing crop insurance through FBN Insurance is not required to participate in FBN crop marketing programs. FBN members can choose to purchase coverage through any licensed agent of their choice. We are an Equal Opportunity Provider. FBN Crop Insurance is only available in states where FBN Insurance is licensed to operate. FBN Insurance services are offered by FBN Insurance LLC (dba FBN Insurance Solutions Services LLC in Texas, and FBN Insurance Solutions LLC in California and Michigan). FBN membership is not required to purchase through FBN Insurance. FBN Insurance is currently offered in the following states: AR, IA, IL, IN, KS, MI, MN, MO, MS, MT, ND, NE, OH, OK, SD, TX.