FarmLink’s vision is to help you make informed decisions that help turn your grain into profit, and our analytical team has a significant role in that vision. They analyze the market, break down all the information, and strive to ultimately provide you with the best information possible. Their main goal is to manage risk and present marketing opportunities, which help to maximize your returns.
There are three key pillars our market analysts consider when it comes to forming a price opinion:
- Fundamentals: Numbers, graphs, trends
- Market psychology: How does the market feel about those numbers?
- Leveraging our network: News sources, reports, articles, talking to our clients and the people we know, understanding the current behaviour, and leveraging our contact list
Here’s how they intersect to provide you with an informed, reliable price opinion.
Fundamentals of forming a grain price opinion
FarmLink’s analysts use a combination of data sources and market intelligence to formulate opinions on potential price changes. They look at both publicly released data and FarmLink-derived data, which includes sources such as Statistics Canada and the United States Department of Agricultural. They also look at historical FarmLink data on crop production, prices, and trade flows.
When reviewing the fundamental data, the analysts consider these questions to determine the most important facts:
- How are things changing?
- Are there any noticeable trends?
- What about when we look at supply and demand?
- Are there any significant changes from previous weeks/months?
These fundamentals are the building blocks for forming a price opinion. It is worth remembering that there is a lot of data to comb through. At FarmLink, we use our GrainFox platform, which expands the capacity of the FarmLink analytical team when it comes to gathering and interpreting the data.
How market psychology affects price opinion
The questions posed when considering market psychology serve to add come colour and provide some insight into the fundamentals we examine when forming a price opinion.
“What is the feeling in the market?” is a crucial question to ask when developing a price opinion.
This is where emotions come into play, and we talk to our network to get a “boots on the ground” view. We want to know what our network is experiencing firsthand locally, nationally, and internationally.
FarmLink has an extensive network of Grain Marketing Advisors who live and work across the Prairies. There is a constant feedback loop on local marketing conditions, farmer sentiment, buyer sentiment, and crop conditions. Our analytical team then uses these insights to enhance our assessment of risks and opportunities.
We may ask our Grain Marketing Advisors these questions: What are producers saying? What are their needs going to be? What are their concerns? What is going well for them and what is not going well?
The analytical team collaborates to consider what variables and information from our network may alter price trajectory now or in the future.
Gathering information from worldwide sources to form a grain price opinion
The world operates beyond numerical data — national and international news, events, and contacts play an important role in finalizing our price opinions. This step is critical when rounding out all of our information.
We look at news stories from various platforms and sources online, newsletters, and reports. In order to offer you the most reliable price opinion possible, we aim to collect as much information as possible and talk to everyone on our contact list. We ask what all the data and numbers mean for producers across the globe, and we ask ourselves, “What’s new today? Why does this matter to our producers?” This pillar of forming a grain price opinion answers the question: “So what?”
Gathering all of the pertinent information, analysis, and opinions turns the fundamental data and market psychology into relatable, usable information. This is where raw data and emotion meet to tell the full story.
News and current events can heavily impact the data. This could include wars or natural disasters like hurricanes. A news article may also detail how the markets are changing. These stories are an essential part of forming a price opinion.
How is FarmLink’s “three pillars” approach to price opinion different from others out there?
FarmLink has built a team of market and data analysts, while many grain marketing agencies are one-person shops. While they may be excellent at their jobs, there is always the risk of capacity issues. The markets are too vast and constantly changing for one person to keep up with.
FarmLink has multiple market analysts, as well as a team of data engineers that data team that complements and supports their efforts. Our data team is developing tools that assist the market analysts and provide machine learning and artificial intelligence-based solutions.
Our Grain Marketing Advisors (GMAs) and clients provide invaluable “ground intelligence.” Having the boots-on-the-ground approach creates an opportunity to receive information first, before the broader market.
GMAs work with you to help clarify your goals. Farm operations are complex and we know certain producers are better at or more interested in different aspects of the process. GMAs help tie together market analysis and your expertise in your own business to help create winning grain marketing decisions.
If you have any questions about how we form price opinions or how our advisory team can help you maximize your profits, book a meeting with an advisory today!