A new strategy for maize marketing

Markus Monteiro, Bennie Grové and Nicolette Matthews of the Department of Agricultural Economics at the University of the Free State provide an alternative hedging strategy for the South African maize market.

- Markus Monteiro, Bennie Grové and Nicolette Matthews

Grain marketing can be complicated, as producers need to address two critical questions before a final marketing decision can be made: when is the optimal timing to market their grain, and how much of the expected harvest should be allocated to each marketing activity?

Several grain marketing strategies have been proposed to assist producers in their decision-making process. One common strategy is to follow a routine that involves marketing the expected crop in three segments, evenly spaced throughout the production season and consistently at the same time each year. Complex technical analysis strategies have also been suggested to assist grain producers in their marketing decisions. However, these strategies often fall short due to their complex nature and inability to adjust to changing market conditions.

FAST FACTS

Grain producers should reconsider their maize marketing approaches and steer away from suboptimal strategies. 

Producers need to decide when the optimal timing is to market their grain.

Several marketing strategies have been proposed to assist producers in their decisionmaking process.

Considering these limitations, the Department of Agricultural Economics at the University of the Free State conducted an in-depth investigation to suggest an alternative preharvest marketing strategy that is both straightforward to implement and adaptable to changing market conditions.