Basis Variability in Montana DNS wheat prices/basis

[charliep]

Basis variability is a characturistic of the wheat market even in the US. Here is a list of Great Falls Montana DNS 14 basis and cash prices for different dates. Picked the best basis (November 14) and highest futures (December 18). Don't know how to do a table but will post as below.

November 14
Futures - USD $5.89
Basis - $1.13 (Strongest basis)
Cash - $7.02

December 18
Futures - $6.60
Basis - $0.58
Cash - $7.18

January 16
Futures - $5.85
Basis - $0.53
Cash - $6.38

January 30
Futures - $5.57
Basis - $0.78
Cash - $6.35

[SASKFARMER3]

But with that basis is equal to 7.50 canadian when you deposit that check!
We're getting screwed!

[charliep]

Just noting the range of basis from about $1.15 over to $0.50 over. The basis/cash price is best bid with the range on any given day about $0.50 lower than this. The prices and basis are from the Montana Wheat and Barley Committee website.

[bucket]

Charliep

Lucky for them there is no fx calculation to do ?

Look at the way they do a calculation.

Mpls futures plus or minus the basis.

Like Sf3 said there net price should be well over 7 bucks cdn here.

[Braveheart]

SF3, how are you getting screwed? You've got trucks, and drivers. Load those ****ing trucks and head for Montana.

[charliep]

For what it is worth, you could have had close to your $7.50/bu if you had sold March MGEX futures when prices were close to $6.50/bu. I know shoulda, coulda, woulda but the opportunity was there. There is more than one way to skin a cat. Perhaps the best tool is a market plan which set targets and works everyday to come up with ideas to achieve them.

[SASKFARMER3]

This thread is about basis not should of could of! just admit farmers Are getting screwed in Canada!
It's real easy to see!

[Braveheart]

You're only getting screwed if you sell grain into the weak basis. Don't do it. Take control. Wait till the basis improves. You're screwing yourself otherwise. Grain cos aren't screwing you. You're screwing you.

[Hopalong]

Had many years with futures and variable basis system for canola along with wheat board fixed price system for wheat.
Do not think we can have it both ways for same crop at same time.

[Hopalong]

Kind of gets to me when people say ending wheat board system was a good thing and go on to complain about open market.
When forced to choose, open market wins.

[SASKFARMER3]

Brave when are you going to get that I'm talking about joe farmer! Average joe!
But the basis does piss me off how bad farmers are getting screwed!
And lets all over produce because that works so well!
Inputs going up when deflation is everywhere except farming!
Ah farming, selling tampons is a better job!

[Guest]

braveheart , I tried that , can't even get a call back from anyone, and I have good wheat , good px . can you offer any suggestions that could help ? also , we are 6 hrs north of border . are rail cars an option ? don't know where you farm , but would bet you are close to US border and you probably know a lot more about it than some . I certainly don't want to give wheat away like this !

[redleaf]

Well I will probably get burned for this and some wil say I am just a piss poor marketer, (probably correct). But here goes. I just don't think we will ever get a straight answer as to why we are getting royally screwed on basis and fx. All the rhetoric about booking a good basis and 20/20 hindsight marketing be damned there is a couple of dollars missing. Well not missing I think we know where they are going. One more point I would like to add j booking a great basis can backfire if the futures month you are booked into go against you. Yes you can always roll into another month but do that a couple of times and that great basis disappears along with further declining futures. I know I've been there without options to protect myself.

[Braveheart]

I'm not saying to go south. Let's just not sell grain when the basis is weak or not good enough. When farmers sell into a weak basis, grain cos have not much need to improve it, and they're already warehousing grain they likely didn't have a sale for.

We don't need to form co- ops or cartels, we all just need to store our grain until the companies have to come with stronger basis. Yes, it would take financing, cash advances or what else to cash flow our farms but it would help bring discipline to the marketplace.

[charliep]

I will let others jump in on other things. Perhaps I would ask what your risk is if you book a favorable basis? If you have crop in the bin, will you not lose the same amount of dollars as having signed the basis contract? I realize that you have more opportunity to postpone a pricing decision but that is not a guarantee of better prices.