ADM Pissed me Off Today

[farmaholic]

As farmers get more sophisticated and use tools (independent grain grading) to realize what they have it will be harder for them to get it for less than what it is. Although there will be many who accept the gospel according to (insert buyer's name).

The methods of taking more margin will change. Mysterious pricing formulas(basis and FX calculations). Premiums and discounts that don't truly reflect the true value between different grades and proteins. Another way of saying it is creating a generic grade that takes in a wide scope of quality characteristics with very little value between the differences within that spectrum.

One thing you can count on for sure is it will continue to evolve. If you want a premium for the quality characteristics of your grain, maybe you need to direct market it within the continental boundaries. Put it in a railcar and ship it direct to a miller, I'm pretty sure there are people on this forum who do this already. Its a bulk commodity otherwise.

[RTK]

I have sold direct to US millers; via truck and via rail. I am finding that more and more grain is offered to the US millers and the premium is now limited or not there at this point in time. Shipping all my grain this route is not feasible - I need and will continue to use our domestic handlers. Correct it is just a bulk commodity - I just want a fair price for it. If I have a desirable premium product - I realize there are channels to access a premium for certain specs. Does anyone feel they have the ability to force the hand of the grain co's to recapture some margin?

[farmaholic]

RTK, from what you posted I think you realize you can dig your heels in waiting for a premium but there will always be another seller filling the void you create by waiting for the premium. I have #1, 14.5-15.3 px. I would think there might be some value in it for blending but seriously doubt there will be a premium for it. Had there been a huge quality issue this year, maybe there would be a better premium.

CGC harvest survey shows pretty good px content this year. How accurate are the results.of the survey? I assume alot of the late harvested crop is of poor quality.

One of the biggest changes is the grain isn't the CWB's anymore. More.than just handling tariffs involved now.

[sumdumguy]

Farmers keep over-producing Farmaholic. They borrow as much as they can for inputs to oversupply the industry-then gotta dump it to meet cash-flow pressures. Sorry, but that's how I see it.

Some regions have been enriched by Canola, some by lentils, and some by niche crops and these guys can hold out for prices, but there are too many guys who are price-takers.

We had an old bachelor farmer neighbour who kept durum for many years until the price hit $7 in 1973-4. Story is he died with $28 million that his nieces and nephews enjoyed.

[RTK]

Farmaholic; exactly what I am saying and thinking. I just can not see how there is any way I can realistically capture more margin from the grain co's. Hoping someone has thoughts - I spoke with a few smaller neighbours about marketing together to increase volumes - I could maybe work with a few guys but adding 9000 extra acres of production likely has no benefit and more work for me. Next thought is to simply share our individual target prices coupled with delivery location/grade so we create transparency within our group of producers. Any merit to this... Just looking for an idea of what we as producers can do better rather that complaining. Open to all thoughts or ideas.

[RTK]

Sumdumguy - agree with your post. Question i will ask you. Who are the farmers that are not price takers and what do they do to ensure they can negotiate prices they feel is fair. You provided a good example holding grain; I have build storage and can hold perhaps 30% over for about a year; but to keep building storage every year waiting for a wreck not sure that is an option. Niche markets - yes agreed but no way I can do that with my whole operation. Just wondering what the non price takers do different...

[farmaholic]

My first thought would be to quit using one sided non commital "agreements" that play into the buyers plan to acquire grain without bidding on the open market. DDC would be the exception because both parties are committed at the time of signing.

A positive change would be, pricing agreements shouldn't bind the grain to one company. I should be able to sign one, ON THE SAME GRAIN, at all the Companies I want to. First one to accept it gets it and if more than one accept it at the same time , I GET TO DECIDE who I want to sell it to-its my grain.

We keep giving our power away.

[farming101]

Some of the best and most satisfying grain sales over the years have been those we have made to fill an immediate need of the grain companies.
To do this year in and year out requires good quality storage, a great grain company rep, the ability to deliver quickly.
Some of the worst experiences are with DDC's.

[RTK]

Farmaholic; I hate targets - aka free options. I do admit to using them though - generally when I see a price I think is acceptable I add about 5 to 20 cents depending and set it to expire in 1 to 3 days. I try to set volumes at 500t lots to allow myself some paper blending options if need be; I always discuss with grader what bins are coming in so no surprises on their end. In some cases I have to adjust my intended deliveries. Some success maybe but perhaps it was just that mine was the lowest target.

Interesting idea - farmers set up an exchange to offer x amount of grain; independently graded; at a stated price; grain company's then it is first come first served. This offers transparency but what stops farmers from saying I need cash I will just go see what grain co will buy it for and take the cash. Problem is there are two few of them and too many of us...

[RTK]

Farming101; yes there are those opportunities with grain co's that are poorly managed. I have been fortunate enough to seize a few opportunities as such as I have pretty good access to my grain in winter and during wet periods - I can haul whatever the weather or line trucks up if we are seeding/harvesting. For the most part our terminals seem to generally have grain in place well before trains arrive. So opportunities seldom arise often enough to bank on them. Do others find locals are short grain often enough to move meaningful amounts of their production.