The practice of providing 'private' bids is common in the Australian grain industry.
A private bid is a price for grain provided by a buyer to a seller on the proviso that it is not shared.
It is often accompanied with comments about the price being above published bids and for special clients only.
As such, a private bid can create the perception that a seller is getting a special deal, or a price that is over and above the market price.
Often an outcome is it can make you feel more compelled to sell.
But how do you know a private bid is above the market?
How do you know another grower, or grower agent, is not selling the same grain in the same location for the same price or a better price to another buyer, or the same buyer for that matter?
The reality is private bids create less transparency around what grain is worth.
There may be more volume that could trade at or above the private bid you've received, you just don't know about it.
If other buyers were aware of the private bid, they would know the price they need to be at or above to buy grain.
That's how a market works.
In more transparent and efficient markets, the buyer with the highest demand and highest willingness to pay gets the grain.
It may feel as though you're getting a special deal, or that you or your agent have created extra value through a private bid, but the reality is that's a market bid and should be viewed as such.
If a private bid meets your price target by all means sell into it, however it's important to acknowledge that it may not be the best value in the market on the day.
A private bid does not equal more value than the market.
Rather it's another data point to consider when determining what your grain is worth.
An efficient way to determine your grain's value is to offer it for sale at the price you want to all buyers on an exchange while knowing you're protected by anonymity and secure settlement.
That way all buyers can see your grain, crunch their numbers, and try to buy it.
If a buyer bids you directly at or above the price you have offered your grain for sale, simply cancel your offer first and then sell your grain to them as you normally would.
You've lost nothing by having your grain offered for sale, but you've gained more certainty over your grain's value, and on average, it'll sell on the exchange at prices you may not have known existed.
For more information or to see what values are trading contact Clear Grain Exchange on 1800 000 410 or email firstname.lastname@example.org