weber on the news

[redleaf]

Anyone else hear Larry Weber on the radio this morning? I'm not much for posting but I do like to read the posts on this forum and many others, I don't want to get flamed for disagreeing with Larry so I will keep my comments civil.Where has all this talk of broken markets come from? Now that we have some commodity prices that will let us show a decent profit the markets are broken? The funds didn't wake up just this past 6 months and start investing in commodities they have been there for years and at times I've been pretty p'eed off with them too but at least they have given liquidity to the markets, and this time around, along with some decent fundamentals, they are chasing scarce commodities higher. Another point where I would disagree with Larry is whether or not most farmers even know what basis is. I think we all know what basis is supposed to be Larry,And if basis was what you define it as,(COST OF FREIGHT, INTEREST and HANDLING) there would be little confusion,and no need to complain.
However you want to belittle farmers just go ahead and keep it up but I'm sure I'm not the first guy to swear at a representative of one of the line companies one minute over gouging on the basis and the next make arangements to haul my grain in because I need the money.
I'll shut up now but I would like to hear other's views on Larry's comments

[melvill]

readleaf, I didn't hear Weber's radio comments so I can't argue with you on that. However, basis is NOT just freight, interest and handling. Those factors are part of basis but the most important thing that most people miss about basis is that it is a picture of the local supply/demand picture of each individual cash buyer. I have seen two canola buyers at the same point have no difference in basis levels but I have also seen those same two buyers have spot basis levels as much as $10 to $15/tonne different, ie, their cash prices are $10 to $15/tonne different. Does that mean that they their costs of freight, interest and handling are $10 to $15/tonne different. Of course, not. It just means that one company wants the canola $10 to $15/tonne more than the other company - the supply/demand picture at one company is $15 to $15/tonne different than the other.

One other thing that enters into basis but isn't talked about is futures volatility. It isn't mentioned much here north or the 49th but market reports from individual elevators south of us often will "take basis protection" in their cash corn or soybean prices after trading in those commodities at the CBOT has closed. "Taking basis protection" means weakening or widening the basis. The reason is that these elevators can't get their cash corn or bean purchases hedged until the overnight trading begins which may be hours after the cash purchase was made. This basis protection is a way of protecting the elevator's cash grain position in case futures take a big price drop between the end of one day's trading and the beginning of the next day.

I have to agree with Larry Weber if he says that many producers don't totally understand what goes into basis. It's not just freight, interest and handling and storage costs. It's also price risk protection, if necessary.

[agstar77]

Could you give us the station you heard him on, they may have an archive. Price swings like today's dollar move create a real anx among farmers and traders alike. I suppose one of the reasons for the wide basis is the volatility of the cash market.

[parsley]

redleaf,

Keep in mind that often anyone disparaging farmers' marketing abilities prolongs the status quo, as then farmers are scared to give it a try.

Everyone BUT the farmer has made money with the status quo.

Anybody wanting to keep what IS, usually can send a bill to the farmer down the road, somewhere, sometime.

And will.

You might lose some cash on the open market for the first few goes at it, but it'll be like driving the new combine, like installing new software, like mastering gps, like putting pigs on a plane in boxes, table ready for some exotic land, like welding a piece of machinery to fulfil a specific production need, like muti-tasking hired men, spouses, swathing, and helping the kids all in the span of 5 minutes.

Farmers are admirably capable.

So, farmers can learn what a market is, what it does to you and does for you and does in spite of you.

If melvill could learn....... lol

Ride the market-bicycle when it suits you, and when you see gain to be had, and even though you fall off a few times, plan the gain, and for those who feel they can't,...... they have the CWB blankey.

Don't let anyone, and I mean ANYONE tell you otherwise.

Scheezch.

Parsley

[melvill]

Pars, not so sure I know what "If melvill could learn....... lol" means but . . .

Just came back from a really intensive 3-day marketing course that my colleagues, Neil, Dave and I taught at Leduc. 18 producers there and one really cute, but very young woman, there. A big discussion at a coffee break after a basis presentation was whether or not basis was more than freight, handling and interest. Discussion would have been more fun if lubricated with "a wee dram o' Scotch" to keep the ideas flowing.

[parsley]

melvill,

I'm saying there are lots of smart farmers out there.

And they will be laying THEIR money on the line. Makes one pay better attention.

Just make a note if one ugly bitch of a woman attended, will you? It's more my area of expertise.

Some have concluded that scotch drinkers contribute little to a discussion, seeingst they seem self-absorbed with sporadic flash-by kilting, and little elses.

Parsley

[melvill]

". . . sporadic flash-by kilting. . ." Now I want to see that!

[parsley]

Not when you see the little elses.

[jensend]

i heard larry weber on cbc this morning and he said that since the exchanges publicly traded for profit businesses they are trying to get as much volume as possible so they are trying to draw in more money and positions. this contributes to more volatility and is different from where we were in the past. that's all i heard him say. i didn't hear him disparaging farmers at all. he just said it's a different trading environment than it used to be. i think his newsletter has said the same (not your fathers' markets) and marketing merits more time and attention.

[seedsman]

question for redleaf: If basis is simple, can you please explain to me how the CWB determines the basis on hrs wheat contracts?

[chaffmeister]

seedsman:

That's not a real basis in the conventional sense.

Its more of a formula. A secret formula, like the KFC recipe.

[melvill]

Hey, chaff, you seem to be able to dig up bits and pieces of "secret" or "semi-secret" stuff. Suppose you could find me the KFC spice recipe? Grin.

[cottonpicken]

Its not your fathers markets is an understatement.

The broader market is the cause of the paradigm change.Stocks,bonds,relestate,inflation.

If you dont have the time to commit to understanding it all,dont.You will whined up knowing less than nothing because you will think you know something.

[FarmRanger]

It’s OK, we won’t have to figure it as long as we have the oracle cottonpicken telling us what it all means.

[parsley]

chaff,

I think you mean the Greasyanne formula, where the Wheat Borer spends time greasing first one palm, and then another.