Grain industry rippin us off not just wheat

[charliep]

For what it is worth, I did a comparison of average elevator prices last fall, average prices during May and an average price October to the end of May.

In the case of wheat (1CWRS 13.5), the average price from Oct/Nov last fall was $220/tonne. The average price during the month of May was $214/tonne. The average price from October to November was $213/tonne. Not including cost of carry (i.e. interest and storage), the farmer who sold last fall was $6/tonne better off that their neighbors who waited till this spring or average their sales out.

In the case of canola, the fall average price was $408/tonne, the 8 month average price was $424 and the May average was $450.

Didn't include any of tools the farmer could have used to lock in better prices/manage risk.

[dave4441]

Market to profit per acre. You don't know if prices are going up or down. Maybe harvest is the best price. Maybe it isn't.

Green pea sales are non existant. Dead market and has been for months.

[stonepicker]

Well willagro, any idiot could sell their grain to your beloved cwb. If you want a better price for your wht., study the markets and learn for gosh sakes! Some on here complain but do nothing to improve their situation. Ya i know, everyone is ripping us off!

[fjlip]

You are right Bucket there is NO open market! Billionaire's playground, we are their pawns. Kid yourself if you wish.

[stonepicker]

You're wrong.

[tweety]

So what you're saying Dave, its all a guess. And yes Charliep you can use 'tools' to settle on a price. But over time it doesn't really matter what you do, you can't outguess market prices over time.

You can fund a traders long vacation to hawaii with all the risk management tools, or just sell 1/12 of your crop every month. Sometimes you eat the bear, sometimes the bear eats you.

In the end it all averages out to an average price given a good length of time no matter the method you choose. The careful sell ahead farmer this year probably loses big time - no grain and buying out expensive contracts, the guy who hung to last years crop will make out real well if there is a drought. A year ago it was opposite.

The biggest lie told to farmers is that the markets are for them, its not, its for the grain industry. And if you disagree, prove it mathematically. I'd love to see it charliep.

[charliep]

I agree with Dave's focus on profit. My own point would be to use the tools available to farmers to manage their pricing risk. I recognize the relationship between production and marketing risk. That is why you keep the percentage of crop priced now reasonable and average sales out during the year. My tools of choice these days would be puts as options strategy for canola and wheat - things that don't require delivery commitment/provide a floor price. Other crops are more challenging.

Can I prove good marketing/risk management mathematically. Likely not in the way you would like. Perhaps my comment would be that land values are increasing and many farmers are building wealth in their businesses. I also observe a lot of farmers who have been very successful in a difficult business. A major part of their financial success comes from how they market their crops and again manage risk.


To make sure everyone understands my definition of risk - managing risk is giving up potential gain to protect against bad outcomes/pain.

[charliep]

Perhaps the point in this thread/others is to watch the current rally in canola and even wheat. The market gives you opportunities but you need actions/decisions. Volatility that you seem to hate is a good thing.

[tweety]

Well if you cannot prove it mathematically, saying you should sell for a profit is meaningless.

Maybe its time we just stopped saying marketing tools are better and actually put some hard numbers to it. consider it a challenge and perhaps this should be a new topic item.

Given this is a marketing site.

[stonepicker]

tweety, " saying you should sell for a profit is meaningless" ?? That's what it's all about! If there's an opportunity to lock in a profit you do it. What exactly are you complaining about? If you don't like marketing tools don't use them and quit complaining about them. people like you liked the cwb because you knew your neighbour was gonna get the same price as you. That's what it comes down to for a lot of people.

[farmaholic]

Now define profit. $5.00 or $50.00/acre

[riders2010]

Show me how you lock in a profit on 15 or 20bushel canola because seen this pony show before and odds are that's what's comin.