Art of Grain Merchandising

Jeff Reardon

Recent Posts

5 Steps to Break-Even Analysis

Posted by Jeff Reardon

Jul 21, 2017 10:16:36 AM

The first step is to eliminate break even from the discussion, no grain company is in business to break-even. Decide on a profit target and this analysis will help to shape the necessary decisions to achieve the goal. Each region and location is different, but for this example the grain industry net profit target is set at 2.5 % of sales before taxes. A company with $30 million in sales will then have a profit target of $750,000. Keep in mind a 2.5% profit is 10 cents on $4.00 corn.

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Topics: Grain Merchandising

4 Steps to Create a Financial Dashboard

Posted by Jeff Reardon

Mar 7, 2017 1:06:47 PM

Financial dashboards are an efficient way to integrate long term goals into your monthly management process. The most effective dashboards have simple easily understood metrics that clearly lead to achieving the long term financial goals of the organization. Financial ratios may not crank the corporate engine but clearly stated working capital and debt balances are a great way to communicate with management teams.

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Three Keys To Financial Success In 2017

Posted by Jeff Reardon

Dec 6, 2016 10:05:08 AM


Efficiency is the word I hear most often when talking with grain company CFO’s. The Sales, Operations, and Finance business segments need to be reviewed and managed with an eye toward profitability. Creating an environment where each segment is pulling in the same direction can be elusive. How can sales grow and operations receive the capital necessary to be successful if the company is not growing its profitability ratios and equity?

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3 Key Points for CFOs in the 2016 Grain Merchandising Season

Posted by Jeff Reardon

Jun 7, 2016 11:00:00 AM

The word is out; grain merchandising margins are down all over the grain industry. Publicly traded and private companies are showing financial stress on their recent quarterly reports. In the high volume, low margin, capital intense grain industry, planning will separate the high achievers this harvest. As a group we still have a crop and a half to buy, will you buy it with a purpose or will you let it happen to you? Today is the day to work through your plan for new crop. Adding pennies or fractions of cents per bushel to your net margin through thoughtful preparation is essential to success this harvest.

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Your Banker’s Top 6 Grain Marketing Questions

Posted by Jeff Reardon

Mar 15, 2016 11:00:00 AM

Solutions to problems have a way of gaining clarity through discussions with trusted outside counsel. Clearly originating low basis bushels is the driving force behind profitable financial statements for grain companies, and this year many regions of the US have struggled to get profitable bushels bought. Lower commodities prices also have put financial stress on our production community.  So when the lenders call, the conversations revolve around these six topics. 

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5 signs of 2016’s Grain Merchandising Profitability Vanishing

Posted by Jeff Reardon

Jan 19, 2016 11:00:00 AM

Last year’s sales have been made, the numbers are great, but the receivables are growing. Will you get paid for the inventory you delivered? When farm margins get tighter receivables and payables become a much larger part of the financial management discussion throughout the agricultural industry. These are five signs that it’s time to focus more on receivables management.

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CFO Strategies: Grain Business vs. Cybercrime

Posted by Jeff Reardon

Nov 10, 2015 11:00:00 AM

 

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6 Steps to Trust but Verify Grain Business Position Reports

Posted by Jeff Reardon

Sep 22, 2015 11:00:00 AM

“Trust but verify” is a Russian proverb Ronald Reagan made famous, but risk managers, CFO’s and grain company lenders live by it today.

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Topics: Grain Elevator Financing

Hedging Currency Risk for International Grain Merchandisers

Posted by Jeff Reardon

Jul 14, 2015 11:00:00 AM

Grain Merchandisers intentionally eliminate as much currency risk as possible and trade based on the changes in the basis in the grain markets. The currency hedging program is in place to lock in basis values, and protect the value of merchandising positions. Money can be made or lost in the currency account, the commodities account, and the physical grain. So it is important to look at all three pieces of the trade to determine its success. Typically a business will hedge the net currency exposure of all its assets with reports created by the CFO.

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Checklist for Finding a Great Banker for Your Grain Business

Posted by Jeff Reardon

May 5, 2015 11:04:00 AM

It can be very painful for grain companies to change banks. New financial relationships require conference calls, planning sessions, and a lot of documentation. The past three years of low operating line usage have taken the financial pressure off the grain business and allowed some companies to put off the search for new lending partners. That being said, the best time to change lenders will always be when you don't really need one.

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