Presold production issues

[Choice2U]

Presold some flax and peas with Act of God to cover hail, early frost, etc. but not too much rain. If presold 10 bu/ac and only produce 10 - 15 bu/ac averaged over full area, the Act of God is of no use and all one has done is lock in a shitty price (assuming these markets explode because of rain everywhere) on the little that one grew. Any options.

Presold small amount of canola but it may end up being a large amount of actual production but I have the ability to buy a call option to take advantage of any price increase.

No wheat presold but that is probably the one thing that will not go up because of the "glut" around the world.

Suggestions please.

[SASKFARMER3]

On peas you are correct if you presold at their shitty winter spring price you will be selling All your production for SFA! It's a win win for the grain companies locking in cheap cheap prices! Ah farming!

[farmaholic]

I had some greens priced at $8.00, wasn't real happy with it to start with, now even less. I gave them the heads up that I'm having problems. There is an act of god but am sure they'll want me to supply, especially given the production problems and potential increase in prices and a basically empty pipeline (or at least little carry over). I have a quarter(approx 2 B loads from it)committed to them but have about 560 acres seeded. What would you do?

[SASKFARMER3]

Wait peas production will be small!

[Rareearth]

Force manure, grain companies claim all the time

[cottonpicken]

Plus there is the trap aspect,you got zero production and prices go through the roof.....act of god contracts different,I don't understand why grain companies don't offer act of god on everything and do the hedging for us,at a price of course.

Could you imagine having to pay out a contract on a year of zero production.

[wannabefarmer]

Never been able to get my head around selling something I don't have and for the most part has worked out pretty well over the years with the exception of this years wheat which went out of here on a fire sale. Only upside to that sale is we had to bins getting hot but only lost a couple hundred bushels in the end. If we would have sat on it for another month would not have been good. Don't ever remember a zero production year around here came close in 82 with a hail storm that was adjusted from the truck window . Managed to salvage enough for seed that was about it.

[Tucker]

Hmmmm lets see... what factory produces widgets that aren't already pre-sold/pre-priced? I sell my canola to Bunge at Harrowby and they already have the oil and meal sold at a comfy profit margin. Do we need to front all the input dollars and then see our crops either prosper or fail and THEN take a price which may be a loss on that production? It would be awesome to only sell or hold what I have in the bin but this is the real world of farming. It sucks and the contracts are one-sided. I'd love to run my farm like the canola/wheat/pea/barley factory it is but this is the way it is. We change it or we stop whining about it. I have been burnt on pre-harvest hell even pre-seeding contracts I've signed. I won't do those contracts any more and I wish that all farmers were in the enviable financial position to turn their nose up at those contracts too.

So. Stop whining about it. What do we do about off-loading some of the production risk we are currently forced to take?

[Tucker]

wait a sec. How is excess moisture not an act of God? Who the heck else gave me the 6 inches of rain in the last two days that ****ed my crop?

[wannabefarmer]

Well not sure if your factory idea is a amid at me but if I had orders for a million tones of peas and could make it myself in a factory that would be wonderful and yes I could price things ahead and chose not to. Have done so for 35 yrs. I sell for the most part when I want for the price I want. debt is covered as well as next yrs growing season. Not bragging nor complaining. Just the way I do things in the dream world of farming.

[Hopperbin]

I may like to take on your 8 dollar peas price. Whilst the current price is in the gutter.

[hedgehog]

Canola should be diving now that your "mega" crop is stuffed.

[Choice2U]

I am sure AOG covers too much rain. My marketing plan never contemplated the impact of signing an AOG clause contact whereby I only grew what signed. My plan was covering my ass for total wipeouts. Just wondering what one could do, if anything, if I ended up locking in pricing of this 100% of a poor crop and prices spike which has potential.

[boarderbloke]

Regarding presold production.

Klause, did you say you were 80% sold on 2014 new crop?

Are you missing the heavy rain and/or flooding?
Any concerns about production problems at this point?
Does the act of God clause in your contracts excuse heavy rain or flooding?

Any others heavily presold on crops without A of G, or futures trading where hedging can take place?
Are you holding all the risk?

[sk_wheatking]

I wouldn't want to be in his boots if that's the case. Why anyone would pre sell 80% of a yield estimate that you think your going to get is nuts. You never know whats around the corner. I would pre sell/book canola at a percentage of my crop insurance guarantee then I was never at high risk. When the rest of the grain is sold you always make out close on pricing anyway with averages. Looks like a long career in the oilfield for him,but maybe there are out clauses? Just never heard of any grain company having anything like that because they have sold that production themselves the minute you booked with them. No one wants to see someone go down because of weather like this.