FX in grain marketing

[gustgd]

The upper class: keeps all of the money, pays none of the taxes. The middle class: pays all of the taxes, does all of the work. The poor are there...just to scare the shit out of the middle class."
George Carlin

[bucket]

Gust

What is there to debate depape for. He's asked more questions than anyone else. He wants answers as well.



And he wrote the book on trading.

[jdepape]

bucket

Actually, I have written a book on trading. I'd send you a copy but I figure you wouldn't believe any of it anyway.

[mbratrud]

I agree with everything you are saying John. I think.

I think the issues farmers including myself are facing is separating Basis and Price. The CWB trained us through their Fixed Price Contracts that we could lock in a basis and follow the US Futures Market. They also trained us to look at Basis, Forex, Elevation, Cleaning, and Freight as all separate things.

Farmers need to pickup the phone talk to many buyers maybe as many as 10 in a 120 mile radius, then work back each price to their bin. You have to determine who wants your product and who doesn't.

Now as far as Grain Co's working in the forex to their basis levels it is fair game, it just isn't very user friendly to the farmer. Farmers that want to separate Basis and Futures have to rewire themselves how they do it. Farmers will have to be sellers of Cash Grain and manage Futures and Forex on their own.

I really wished that we would have had this type of Forex back on Aug 1 2012. Maybe our ICE Wheat Future would have had more of a chance to get off the ground. I believe things would have been much clearer.

[bucket]

If depape's theory is true about basis and it was actually positive then the american farmer would be delivering into the canadian system not the other way around.

Everyone's been talking about getting grain to the states and they have a minus 50 cent per bushel basis.

[jdepape]

I don't disagree - there's a learning curve.

And to be clear, guys should be netting out the FX to get a clearer picture. As I said before, I do it - I convert the cash price to USD tho, to come up with a USD basis. Personal preference, I guess.

[jdepape]

Truly, bucket - either you really don't know what my "theory" is, or your sarcasm and cynicism is getting the better of you.

[tweety]

Ok so after 81 posts, what is the price of 13.5px #2 wheat in central sask, and what 'should' the price of it be?

Roughly.

[westernvicki]

... and no one even mentioned port capacity issues.

[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.