Wheat - sad ....

[Braveheart]

Correction, MN cash bids were $6.38 USD.

[farming101]

I did see in one place it noted the price for wheat in a railcar destined for Chicago beyond. December average was quoted as 10.56 USD for 15 pro #1.
Not sure what that means exactly. Maybe that's the price landed at a flour mill in North Carolina for all I know.
Same report notes Jan 7/15 spot prices for truck deliveries to Minneapolis/Duluth as 6.55 USD

[grassfarmer]

So Braveheart did SF3 and others always misinterpret the US grain prices relative to CDN ones or did the errors start after "marketing freedom" ?

[Braveheart]

I don't know what others are seeing. Maybe it's like the Bible and Qu'ran and everyone has a different interpretation.

In my trading area, including MB, ND, MN, by truck, and anywhere in producer cars, wheat prices are all over. At the same time as some on here are crying "no arbitrage" the local Paterson has had a higher cash bid than any ND elevator in my desired driving range. This year MN elevators in the valley usually lead the way.

Re Canadian wheat in ND elevators, because their movement is so poor, elevator managers don't want to displace local customers that are having trouble delivering their contracts. They are unlikely to take any wheat Can or US out of their area.

The sooner we all leave this marketing freedom backbiting behind and start trying to understand basis, carry, and how local markets change and why, the better off we'll all be.

[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).