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DELAVAN, Ill. – The difference in following the worst American market advisory service instead of the best during last year’s soaring corn and soybean markets would have cost $121,600 (U.S.) in gross income, according to university researchers.
That figure leaps from a tracking of the 25 biggest guns in the market advice business by AgMAS, a joint effort between University of Illinois and Ohio State university.
AgMAS, the Agricultural Market Advisory Services study launched by the two universities, collected all marketing recommendations of 25 market advisers from September 1994 through August 1996 for the 1995 crop year. They applied the advice to an imaginary 1,000-acre, central Illinois farm with production evenly split between corn and soybeans.
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AgMAS measured the results of the advice against what farmers would have received had they simply sold grain off the combine during the 1995 harvest.
Study co-ordinator Darrell Good, of the University of Illinois, issued a caution about the study.
“This is a one-year snapshot of the services,” he said, “so to draw long-term conclusions on short-term performance would be a mistake.
“The analysis shows riskier marketing strategies in 1995 paid off big. Those who held late into the marketing year were rewarded.
“Conversely, those who followed conservative marketing approaches, like Brock and Allendale and sold when prices climbed over the 10-year average, finished at the bottom.”
The results show:
- While the 1995 harvest price for corn was $3.22, the 25 experts’ average net sales price for the year was $3.04 per bushel – 18 cents below off-the-combine selling and 20 cents less than the U.S. Department of Agriculture’s national average price.
- The best adviser, Ag Resource of Chicago, sold corn for a $3.81 average. The worst, Brock & Associates of Milwaukee, chugged in at $2.34 for hedge clients. The net corn price received from 21 of 25 services came in below the average harvest price of $3.22.
- The advisers were better at soybean marketing. Six had an average sales price below the harvest cash level of $6.40; three received between $6.40 and $6.45; and 15 paid above the $6.40 mark. The average sales price for all 25, however, was $6.64, 13 cents less than USDA’s national season average.
- The best soybean advice came from Agri-Mark of West Fargo, North Dakota, which sold soybeans for a $7.50 average. Brock & Associates was the worst performer, earning $5.75 per bushel.
- When all results from the 25 were tabulated to determine total corn and soybean revenue for the 1,000-acre sample farm, average advisory revenue equaled $328,055. Had farmers sold at harvest at $3.22 for corn and $6.40 for soybeans, gross revenue would have totaled $325,990.
As a group, the 25 advisers beat the simple sell-off-the-combine approach by 0.63 percent, or $2,065 for the year.
- The best overall revenue earner was Agri-Mark with $381,744. Second best was Ag Resource at $371,938. The poorest results were turned in by Brock. If hedge clients followed it, they would have earned $260,127. That’s $121,617, or $121 per acre, below Agri-Mark. The second worst performance, a $278,888 gross, was offered by Allendale of McHenry, Ill.
Good and Ohio State colleague Tom Jackson agree the results suggest farmers should understand marketing approaches used by advisers before signing on.
AgMAS will continue to monitor the services. And it is building databases on advice in cotton, cattle, and hogs markets. Also, two-year track records for advisers in wheat marketing will be released this summer.
