HRS

[redleaf]

Thanks for your reply Joe. I'm not usually one to reply to threads, I prefer to just read what others have to say in hopes of sharpening up my marketing. So perhaps you are right when you make the accusation that I and perhaps others are whiners but it is no simple matter to market well. Example after last winters basis fiasco and well before I or anyone else knew the outcome of this years crop a $39 basis for wheat looked like not too bad of a deal. Cncerns regarding storage prompted me to sign a contract to lock of a delivery slot. Turned out the markets moved against me all fall and the basis was down to 0 when I was forced to price. Too bad for me .... Bad timing ..... Bad judgement .... Should have used options ....should have .... The list goes on. My point is how the hell can you ever know what to do when you have the markets plus basis fluctuating wildly. Yes perhaps I should market better and believe me sometimes I do or I wouldn't still be farming but if I and others are simply " whining" when we complain about gouging by line companies well I guess I will just shut up.

[foragefarmer]

John

You stated

The sooner we get farms on a similar plain as the buyers (regarding how they approach marketing), the sooner this “problem” of low prices (basis) gets solved.

How many producers 30,40,50000 trying to market their commodities after harvest. Every farming situation is different, with regard to cash flow, shipping restrictions, space, grade, etc etc. How many major buyers in Canada of CWRS maybe ten. Very small percentage can haul it south of the 49th. Just how is it possible for producers to get on a "similar plain as the buyers"


How can you throw out such a blanket statement as that. Are you saying farmers should get together to form marketing groups or co-ops to have greater power when dealing with buyers. Or do we keep functioning as 30,40, 50000 individuals.

Please explain

[bucket]

Mpls is up over 50 cents a bushel in the past week and locally prices haven't changed.

Interesting.

[jdepape]

Theoretically, if every farmer out there refused to deliver grain, it doesn’t matter that there are only ten buyers – they would have to react by paying more. But you’re thinking “how do you get 50,000 farmers to act the same way?”

If every farmer out there reacted to market signals correctly, we would never see the extreme low bases (prices) as we’ve been seeing.

Rule #1: when basis is low (lousy), futures spreads are wide too. Both these market factors are pointing in the same direction. The lousy basis is saying “don’t sell”; the wide spreads are there to PAY you to store. When basis is bad, spreads are there to compensate you. You need to learn how to take advantage of that if you want to go toe-to-toe with grain buyers.

You don’t have to try to change the world by going all “collective” in your marketing. Just – even individually - take advantage of what the market is providing.

Rule #2: when basis improves, spreads will also tighten up – potentially to a point where the market is no longer paying you to store. THAT is when you sell and deliver. Why keep storing when the market isn’t paying you to store anymore? More importantly, why store at all if you aren’t getting paid or compensated for it? (Waiting is not a marketing plan – to earn storage revenue there are things you need to do – ways you need to act in the market.
Learn how and you will never need to complain about low basis (low prices) again because when prices are low, you will be getting paid to store your grain – AND getting better prices later when the market tells you its time to sell.

You don’t need to form marketing groups or coops; in fact that doesn’t give you any more market power if you don’t understand the three fundamental pillars of grain marketing:

1. Proper storage
2. Capital (cash, that is)
3. Knowledge – understanding how to extract more out of the market

[bucket]

Basis and futures have improved now try to find an elevator taking delivery of wheat in my area. Not really cost effective to have it trucked to Alberta because that where they are buying and taking delivery to help the railways.

Any gains just got ate up in tires and fuel.

Costs money / grain to put up bins so we can all get on the same page.

[mbdog]

redleaf...you did nothing wrong.

[jdepape]

I agree - mbdog.

redleaf - sorry if you feel beat up. I said complaining - whining is a lot different than complaining. My kids whine - my wife complains. Big difference.

I didn't see you as whining. You have good reason to complain. As an industry we have done a lousy job at explaining how markets work. I remember being involved in the Cash, futures and options courses we put on in the 90's. Real entry-level stuff. It was like giving guys a textbook on brain surgery and telling them to "go read it and then give it a try".

We should have done more.

For where I sit in the cheap seats it seems to me, although we should have done it long ago, now is the time to "UP" you game and learn how the market really works.

And I guess my point is this. I hate bad regulations - and when I hear talk about grain company gouging and farmers being taken advantage of, and of people like Ralph Goodale suggesting we "cap" the basis as a solution, I cringe while I envision all kinds of opportunity (and farm profits) go out the window.

I don't think the solution is to regulate more. I think it is to make improvements where we can. And when I see guys selling at 40-50 under when there is a large "carry" in the spreads, I am reminded where we can improve the market the easiest.

[TASFarms]

On the tax issue. If your not paying tax your not making money. It's as simple as that.