FX in grain marketing

[bucket]

A quick check says at moose jaw I could get 5.75 to 6 bucks cdn.

Here is my theory on what it's worth.

Average cumulative price at the west coast is about 9.25 a bushel to date t his crop year. Minus about 1.65 for freight elevation and inspection you vo me to about 7.60 a bushel cdn.

Give or take something for profit I really don't think 7.25 to 7.45 cdn would be out of the question without having to spend on other products

But back to the tin foil and let's just say 5.75 cdn is fair. And we should be thankful we made less off out farms than the graincos.

Or we could look at a comparable north dakota point and find they are netting 5.40usd and equate that net price to 6.50 cdn. Only a buck higher than the locals. Where does that sound familiar?

Or we can look at mpls futures that ended today at 5.78usd or 7.31 cdn. Minus 1.65 actual basis and end up with 5.66cdn.

I guess it depends on where people think their grain goes - mpls vancouver or thunder bay as to what is a fair price.

I do know I get deducted rail freight to a canadian port so I expect since I prepaid the freight bill the least they could do is pay me a reasonable representation if port price.

I ****ing have run out tin foil.

And lost my train of thought.

[jdepape]

If bucket says it's worth 5.75 to 6.00, I'll believe him.

If they are buying all they need at that price, then THAT is "what it should be". (I can't say "the market is always right" else I raise the ire of Weber.)

If it's not the right price, which party taking part in the transaction should we say is wrong?

The buyer - for paying what you think is a ridiculously low price? (How much SHOULD he pay if (1) he doesn't need it for a sale or (2) he's not sure he will get it to his sale anyway.)

Or the seller - for selling at such a ridiculously low price? (How much SHOULD he sell it for if he needs cash now.)

[jdepape]

Here's what I don't get.

Bucket says he can get 5.75-6.00 in Moose Jaw. OR 6.50 in ND somewhere.

Is the extra trouble and cost to ND worth it?

If it is, why not just haul there? Why worry about Moose Jaw?
If its not worth it, don't go there.

You've got two price options and because one is lower than the other you think they're ripping you off.

It reminds of a farmer a met long ago. He had two elevators in his town that he dealt with and was complaining that one was paying 30 cents/bu lower than the other for canola.

"30 cents lower?! That bastard is trying to rip me off!"

I suggested a couple of reasons why they would have different prices but I could see I was getting nowhere. So I asked him what he would think if they were both paying the same price.

After thinking for few seconds he said "Then they'd BOTH be trying to rip me off!"

[bucket]

Maybe some people don't remember how things would arbritrage .

In other words the voices would be even. Not exactly the same but close.

I am not sure who you caught ****ing a sheep. Ritz probably and maybe it was an ostrich.

But it seems much like graincos, you have them over a barrel.

Considering that you are into telling stories at this late hour.

[bucket]

Substitute prices for the word voices.

[farmaholic]

Bucket. I'll mention it again. farming101 started a thread and posted an interesting chart from the CGC, the last crop year(10/11) in that comparison shows the estimated cost of moving grain to port. For Vancouver from mid point Sask it estimated at $83.44/tonne or $2.77/bu.. We only saw about, as you say, $1.65 deductions off our cheques. The rest was paid out of the pool.

And once again my arguement is, should all those deductions be borne by the Producer? It's not my grain anymore once it drops through the grate and I am definitely not the "cause" for the demmurage charges. I also bet alot of those deductions are cost plus.

Taking value from Producer's can be compared to taking candy from a baby.

[tweety]

Two very good points:

We don't know what the costs are to get a bushel of wheat to port.

Farmers sell it for too less and then whine.

[jdepape]

Bucket - you talk of people not remembering how things arbitrage yet you seem to have forgotten. "Things" don't arbitrage - people do.

And this idea that prices need to be the same - or close. What is close for one is miles apart for another.

The fact that you are reporting the differences yet not capturing the higher prices you see in ND suggests you think its not worth the trouble. In your view, the extra 75 cents doesn't cover your extra cost and trouble. Fair enough.

In other words, you're indifferent. By the way, that's the textbook definition of two markets that have arbitraged. Not prices that are exactly the same, or even close - markets have arbitraged when market participants are indifferent between the two prices.

The fact that they aren't that close suggests this market is not efficient - there aren't enough players who
(1) are aware of the price difference,
(2) are capable of taking advantage of the higher price and
(3) willing to.


And the moral of my earlier story is simple -

there are some people you will never please.

[farmaholic]

Ooops, fat finger typing/dyslexia. I meant $2.27 not $2.77, 50 cents is quite a bit of a difference in this case.

Tweety, I still think knowing all the costs of what makes up the basis is necessary. How else can it be determined if its fair?

[SASKFARMER3]

Depp its about money. Follow it if were not getting a fair shake in Canada.
Answer how come the grain companies margins on wheat have gone from a fair 25 to 35 to 90 to a obscene 125 a ton.
Just answer where that money came from.
Rather a simple question. Your the guy with who wrote the book answer the question. Were just the Dumb farmers who doo all the work.
Have a great day.

[bucket]

Minot north dakota to the pnw is roughly the same distance as moose jaw to Vancouver.


Let's think about that.

Should prices be much different for the same market?

[SASKFARMER3]

Follow the Money. Canada Grain companies are enjoying the new way.