Useless Canadian Grain companies

[farmaholic]

How?

Yeah they make some money from selling the option. So does a broker. Grainco's i've found have been better to deal with for options. Cost is very similar between them both.

Why shouldn't they offer them? It's not hurting anyone and is another tool we can use to maximize profits/reduce risk.

Ok then.... every farmer just blow out your grain and hope the prices go up.... Come on Kinger...

[mcfarms]

would a person not be wiser to do a futures only into Dec 18 carry the wheat forward use the carry and the protein spread back to a 13.5 contract spec to pay for the additional fertilizer bump needed to push that 18 crop protein up to where you have a ability to blend at those spreads? ( I did a quick napkin math and I think .90 some cents a bushel in carry and protein from sf3's 12.5 to 13.5 contract spec, using the 60 cents stated for the spread as they vary from company to company ) As a little exercise if you have low protein wheat this year do your bushels multiple it by the spread and carry and take a look at how much n that would buy you to add to next years wheat crop it might surprise you)

Ive done well in the past carrying wheat , seems next years grade determinants are always way different than this years and blending seems to work best when you are not trying to flog the same stuff everyone in the country ( planet) is doing. this year low protein wheat is everywhere world wide . Only stuff that will find a home will be the stuff they need to blend lower quality up. As I had great protein last year I blended the previous years carry over up and did well retained a couple bins of high protein just in case and it turns out my protein is all above 13.5 so ill make a decision on whether to keep some again based on spreads in the winter and spring.

Now all this only works if you can cash flow until these sales. Wont tell you if I can or cant just saying take a look at the options As an aside you'd find basis levels may be wide now for that dec 18 but normally I get a chance a a decent basis in the spring.

[MBgrower]

For two commodities like corn and soybeans that don't have eight different classes and protein spreads to worry about .....you are right using futures for soybeans and corn probably makes sense....


Fora thinly traded commodity like canola and now no wheat durum or barley markets in Canada it's not the case. ....even American farmers talk about mpls as one to stay away from....

Now start talking about peas lentils flax and a commodity exchange. .....where are they? Peas and flax disappeared what 20 years ago.....


It's all noise.....

often theres more risk in wheat basis than futures. lets say you presell 1hrs135 new crop,and then harvest 3hrs12.5 with 3% fusarium some midge damage, etc. your original basis could end up getting adjusted by more than the change in futures. how do you hedge against basis change? cash index futures don't trade anymore. furthermore, had you not presold that grain, chances are you could sell it direct to a feed user for more than the grainco ends up paying you for that 3hrs wheat. kinger sounds like one of those grainco guys who don't understand the complexities of marketing and hedging from the production side.

[Guest]

often theres more risk in wheat basis than futures. lets say you presell 1hrs135 new crop,and then harvest 3hrs12.5 with 3% fusarium some midge damage, etc. your original basis could end up getting adjusted by more than the change in futures. how do you hedge against basis change? cash index futures don't trade anymore. furthermore, had you not presold that grain, chances are you could sell it direct to a feed user for more than the grainco ends up paying you for that 3hrs wheat. kinger sounds like one of those grainco guys who don't understand the complexities of marketing and hedging from the production side.

Or the insane risk we face every year

[farmaholic]

Or the insane risk we face every year

Ah ****....what's a bit more risk for us to help ease theirs?....Just sell it and take a position....don't worry about the futures or option and rolling costs! It's the least we could do...

[Blaithin]

Blaithin, maybe Producer's are paying for the "Sellers" inability(penalty) to fulfill THEIR contract specs with their buyers?

I think that can be a fairly accurate assumption.

I don't know if I would call it a penalty. Farmers sell contracts based on what they think/hope they might harvest, Grain co's do the same. Try and take advantage of the futures market and it doesn't always work out. This year, the protien is kicking everyone in the ass.

It needs to be remembered that Grain Co's are the middle men. They have just as much potential of being stuck with a commodity that they can't make a profit on or sell if they aren't careful. So they're very careful. They're lucky in the fact they have farmers as a buffer against Mother Nature and the risks she carries. Does that mean they're screwing over the farmer because they won't buy the product the farmer has, despite it's specs not being anything they could sell? They wouldn't be in business very long if they plugged up all their terminals with off spec grains they don't have sales for, just because that's what was around in their area. Right now they have sales for higher protien and the majority harvested is looking to be lower protien. They don't need low protien, so aren't offering to pay anything for it; They do need high protien and that's in smaller quanities, so the premiums for it are high. It can be sickening, the gaps between the protiens especially, but it does make sense from the supply and demand perspective.

Does anyone here have 15.0+ px and feel like they're being hosed by Grain Co's? Or is it just the people that don't have the protien that feel they're getting shafted.

[blackpowder]

Or just sell it in June for Sept delivery at >$8 like this year.

[seabass]

I think we did have coops. They were called the wheat pools. We gave them away for free. Hoodwinked!

[farmaholic]

Aaaahhhhh yes.....the perils of selling something you may not have or be able to get! Producing something in an environment that doesn't provide consistent predictable results.......we aren't manufacturing widgets in a factory. My God!

.....and there's enough grading specs and tolerances that need to be met that there's always "something wrong". Quite the arsenal of ammunition to beat something down with....

[GDR]

Most of you guys seem to miss the whole point of free market that you have asked for. Name of the game is make as many dollars as you can. Same applies to grain companies input dealers machinery dealers and of course farmers. Don't know how any self employed business people can argue with that. Asside from collusion or price fixing good for the grain cos to make a buck.

I personally like the marketing end of things, don't always do it right but can be quite the rush sometimes.