Wheat - sad ....

[jdepape]

When I was trained a gazillion years ago how to trade grain, I was once told "when you're trading grain, you're actually trading freight."

All this means is that transportation has a huge price impact - not just the freight rate, but availability.

If you're looking for the problem here it is simply FREIGHT.

It has absolutely nothing to do with the end of the single desk or grain company gouging.

Braveheart's got it right.

[farming101]

True, one cannot ignore the part freight pays in cutting into the profit margin.
It is amazing how much profit can be eaten up just to pay for getting grain trucked down the road a few hours, not to mention rail and ocean freight; it's all part of the picture.

[farmaholic]

Re freight, For anything I want its cost plus. When I sell, its price minus. Why?

Equipment, vehicles, fert, and everything else. Its built in (and likely inflated beyond the actual cost).

Anyone seeing a reduction in freight costs due to fuel prices being 25-33% lower? You wish, no one will give up the gains made on the back of higher prices.

[jdepape]

It's not just the rate - or obvious cost.

Graincos this year were reluctant to be aggressive sellers like they were last year - afraid of a repeat.

Typically, they would sell about 85% of their throughput capacity - less than 100% because of rail uncertainty.

This year, I'm told, it's much less than that and they are factoring in a higher than normal probability of disruptions / demurrage etc. All that translates to lower prices (lower basis) to farmers.

Your market power, if you choose to wield it, is the ability to ship elsewhere or hold back (and earn the carry if there is one).