crush margins must be HUGE!

[cottonpicken]

I'm worried about the family farms that can't cover
contracts and end up getting a bill.

[charliep]

That is what crop insurance is for. If
you live in Alberta, you have variable
price benefit as a standard feature. In
saskatchewan,you had the alternative of
variable prime option.

[cottonpicken]

Ethanol company over family farm and thats what
crop insurance is for?

Explain that to me like i'm 3 years old.

If your taking crop insurance,your hurting and an
extra bill to off set a trade loss,when your hurting????

I've brought this scenario up before,it is now
happening.

[cottonpicken]

Oh,yea,ethanol-the absolutely stupidest idea ever

If you own shares-get out.

[cottonpicken]

A riddle

And then get back in/in time

WithIn 15 years not a bushel of corn will go through
the plants

WithIn 15 years the ethanol plants will be at max
production

[charliep]

Just an acknowledgement that farmers face risk and
crops insurance/forward pricing are ways to deal with
it. Both give up gain but they also protect against
pain. If things hadn't got dry across the mid west, we
would be talking $4.50/bu corn. Not the situation
but could have happened. If you live in Alberta, and
the canola price goes up 50 % in October, you crop
insurance coverage on canola could increase to
$16.50/bu.

In the world of volatility, you had better even more
time on insuring you know the financial backing of
your buyers (oneoff has made this point). Leave
ethanol alone but consider feed lot. Your buyer has
cattle with breakevens based on $6/bu corn (US
example). They didn't manage the risk on their feed
and corn prices increase to $8/bu. Major losses with
maybe the inability to pay.

Just trying to keep everyone focused on the bottom
line and making appropriate marketing decision. My
only thought is to use this rally to book at least some
of your production. Buy puts. Sign deferred delivery.
If basis levels are ugly and you have the resources to
make margin calls, sell futures. Stay in tune with the
market either watching for breaks in the charts or
setting targets. I don't think this rally will last for
ever. What will get you is not you know but what you
don't know.

Your most interesting You Tube was the scene from
Tin Cup with Kevin Kosner.

[charliep]

Interesting as you get older and you have lived
through stuff. Great grain robbery. 1988. 1993 (I
think). 2007/08. Likely others. These things come
and go. What is interesting to me is the demand lead
side of this rally (at least to June 15). Supply
generated rallies don't tend to have staying power in
my experience. But I could be proven wrong.

[mcfarms]

Charlie
Interestingly basis has narrowed the last couple days.
Was 8 under earlier in the week for jan 13 today it was 2 under. which allowed a over 14 dollar sale. I think if I start my sales at 14 and scale up I might be ok.
Lots and lots going on in the marketing world,

[cottonpicken]

I admit you are completely right about that stuff,just
have a bias towards semi ill informed farm families
that are swimming in a shark tank but are maybe
unaware and ill equipped.

A hedge fund manager in hong kong on a computer
will be drinking their milkshake.

And yes that man will make money when it goes up
and down.

Some day i'll learn to lay up.

[hobbyfrmr]

Cotton, don't lay up there is some truth in your
ramblings.

http://www.urbandictionary.com/define.php?
term=i%20drink%20your%20milkshake

[ado089]

I use options for ok prices and sell
futures for great prices. To me great
prices for canola are $605/mt and up and
for wheat it is $9.50/bu and up. At
this point in time if prices are
sustained much higher than than that
something else is going very wrong. I
also will not sell more than 15bu/ac of
crop, if the price is that good that I
feel compelled to sell more I will do it
with options.

As far as my CSCO issues. First of all I
started with Mar delivery. Issue number
one was in April when I wanted to lock
in my risk free tonnes at $619/mt they
had no basis that far out and they
wanted what at the time seemed like a
hefty price to lock in the futures
first. When I'm committed to delivering
to a certain company I hate locking a
price without a basis. The second issue
was grading. The same samples were taken
to 5 elevators in 3 towns including the
local Cargill, all called it .2-1%
green, CSCO folks called it 4-7.5%.
Lastly once I finally did lock in a
price (~$560) I wound up with $2,400
bill because they would not let me deliver generic against a 700bu shortage
on a 18,000bu contract.

So to summarize at the end of the day I
spend $7/ac more on chem and seed to receive a potential $12/ac premium more
or less to for the sake of being able to
lock in 14 bu/ac risk free which pretty
much was not able to do until July.
Then at the end of the day any premium I
would have received was clawed back
through grade discounts and contract
buyouts. This learning lesson in
marketing brought to me by the fine
folks at CSCO cost me about $25,000 on
480ac.

[hobbyfrmr]

Ado, thank you for sharing. Those are the
marketing details that are necessary to know. In
the past, AVers have summarized that they were
more satisfied with non specialty canolas for the
same reasons you describe. The difference is,
that, you quantified it.
For fair grade comparison, have you sent uniform
bin samples to SGS for grade and dockage
testing? It's not expensive compared to the
$25,000 you are giving up.
Most farmers do not ever pay to use these
services until it is too late. Then again, with prices
as high as they are, the farmers don't need the
extra money so they don't try for it.