A mechanical marketing plan or strategy does not rely on price outlook, market information, or any new analysis. A producer using a mechanical marketing plan sells the commodity the same way every year. An example is to sell the commodity at harvest every year. Price level or outlook does not change the marketing plan. No outlook is needed or used.
Market information is ignored.
Mechanical marketing plans require that actions be taken irrespective of what is happening in the market. By using forward contracts, futures contracts, put option contracts, or call option contracts, producers may sell wheat before it is harvested. A marketing plan involving the use of a mechanical strategy consists of selecting a marketing plan and using that plan every year. The following sections show the net price if different plans had been used during the last 14 years. Prices for strategies using futures and option contracts were adjusted for brokerage and interest costs.