GPO's

[countryguy]

I have never had much to do with gpo's so I don't know too much about them.I was led to believe that by placing a gpo you were using a tool to help you sell your grain while not having to watch the market all the time.Once the futures hit your target price your grain was automatically sold.

I have read many posts from Kernel advising us to put out gpo's for 8 dollar or so canola.What I get from him is that a gpo is an asking price for your grain;kind of a take it or leave it deal.Since this is different from what I believed before can somebody tell me the exact definition of a gpo and how one is intended to be used?

[TOM4CWB]

countryguy,

The grain pricing order is a firm contract that states that you will sell a specific amount of a certain grain at your target price.

This allows the company to know exactly what you must have to make the deal... and this can happen in two ways.

1. If the futures rise enough that the companies normal basis triggers the price, then the target is met and the contract in triggered. Often futures trade during the day's session can trigger these contracts as the daily high often is not at the close of the session, so a midsession trigger can occur without you watching the market trade every minute of every day, it is done automatically.

2. If the company needs the grain, the company can narrow the basis to trigger the contract.

Most important is to know your own costs to know what a profitable price for your farm's grain, and what price is attainable and could be paid by your grain company.

If these two come together, then the contract is good for both buyer and seller, the trademark of fair business that is sustainable over the long term.

[TOM4CWB]

A good explaination of a GPO Tom.

Now countryguy there,s alot a laughter in the coffee shop here about me placing an $8.50/bus. GPO for Oct. delivery. But several of the other farmers have also placed the same GPO.

This may appear to be a tad optimistic right now but we have never lost a crop this time of year either and I'am not about to give my new crop away on the futures market at this point in the year. So I fiqure that if enought farmers would commit to a GPO on their new crop it could and should help to push the market higher if buyers want to guarantee supply of the new crop.

Ianben what do you think of this method of asking for a price. Could it be a vehicle for farmers to gain alittle control for higher prices.

Now most market experts and anlyst done mention this option in the market because there is no commission paid or earned on this transaction. You just place the GPO with your Grain Co. and there is no cost to you. All grain Co.'s may not provide a GPO contract for you though.

[Steve]

Countryguy;

For more info on GPO you can go to Revised Marketing System Dec.5 2001 21:27 on this thread.
Tom did a good job of explaining, but you may want to take a look at my comments when I first started to promote GPO in Dec.