Grain trading as a business is not developing fast enough, and many companies have to revise policies in order to keep afloat and expand. A vivid example is “Agrein” Holding, which realized that selling its own products at maximum cost would be much more profitable than a trade. Experts shared their opinion on what factors need to be considered to organize sales.
What factors influence grain trading
As in previous years, rapeseed remains the most profitable culture. It has a stable yield and its volumes do not decrease. Niche cultures do not provide the necessary marginality and are more suitable for small companies.
To correctly identify the structure of crops, it is important to consider several factors:
● crop rotation;
● price forecasts;
● stock exchange indicators.
The grain trading strategy is planned for the next season at the end of the previous and the beginning of the next year. The company sells approximately 30% of all products at a fixed, currently relevant price, another 30% under forwarding contracts, where the price is already adjusted by date. The remaining products left after harvest at a spot cost. But this scheme is not universal, it is individually denoted by each manufacturer.
The country has an acute problem in the shadow market, which hinders the development of grain trading. Approximately 10-25% of all sales occur illegally. Many farmers and shareholders sell products for cash. This affects pricing and hurts large companies.
In order to exclude small players in the grain-packing, it is necessary to carefully select firms for cooperation.
The market formation depends on the influence of certain factors:
● production capital;
● investment potential;
● energy cost;
● economic and political environment.
The importance of the latter factor is clearly seen in the trade war in which the United States and China are participating. The change in pricing in the global market makes it possible to predict an open trade.
The activity of the grain trader is associated with some features. During the hot season, you have to work overtime, to solve logistical problems.
In order to systematize and automate some processes, professionals actively implement the blockchain when concluding transactions, use social networks to communicate with partners. This approach will help make the market more transparent. Already, the standards applicable to the exchange are moving into the physical market. Innovations are being introduced that help to see the real picture of cases and find the right solution.
In most cases, deliveries are made through the ports. For multinational companies, product sales take place on the terms of CPT.
One of the problems of successful grain trading is an ill-conceived logistic system. Transportation by rail does not work to the full, due to the obsolescence of the train and its shortage. Facilitates the problem of delivery cooperation with freight forwarding companies.