"Contract squeeze worries farmers " is the WP headline

[blackpowder]

I can understand the dynamic some have of being far away from terminals. Adequate storage and transportation being infrastructure from the start.
Grade risk a factor when doing contracts for sure.

All you can do is keep your inventory unsold until in the bin while selling last years for cash flow.
Ends this thread.

[furrowtickler]

I will just point out that this disaster we are in was not completely a surprise. Everyone knew the soil moisture profile going into seeding and its easy to work out how much moisture was needed to bring a decent canola crop in. That number would have exceeded the usual annual rainfall in some places that attempted to grow it this yr. Our farm weather services like Drew were warning back in march.

Thats not saying Canadian weather cant turn on a dime, it certainly can, but the odds were long that we were going to get 12 inches if rain fall this summer.

Soil profile was not empty everywhere, and crops in a lot of areas were still average at the end of June . So blanket statements are really not cool right now.
A lot of guys did maybe 20% of average yields which is still very responsible.
It’s only the past 35-40 that killed the crop in many areas.

[farmboy44]

Well , in 2013 lots used “force majeure “
What about the guy saying feed barley has to be 50 lbs , where the **** does that come from?
What about the crusher not buying our contracted nexera for contract price of July futures plus fixed basis as per contract ? Offering us less ?
FWIW , we only have a small amount of stuff contracted , should have more than enough to fill it and fully intend to fill them
And to the question of what the elevator companies would do if on the wrong end ?
Well let’s see? Oh I know ;
Ergot, fuz, test weight , grading games, has to be dryer than govt specs , protein games , well ,etc, etc, you get the picture (discount, discount, discount)
The good news is a whole new bunch of young farmers has learned what can happen
This will really **** up the yearly “harvest happy hour” occurrence

I was agreeing with bucket alluding to if producers get a bail out for things going against them this year, why shouldn’t graincos get to argue it the opposite way another year. Bad precedent

Why didn’t you get the futures price plus posted basis? Where you the fella who left his july futures unpriced until June 30? Last traded price and highest bid are two very different things when volume is gone and it’s expiry day. I explained it a few weeks ago I can did up the post.

If graincos spec for feed barley weight is 50lbs that is because they have export sales and 1cw spec is 50lbs… 303g. Domestic feedlots likely have a bit softer spec, Ill be marketing some to them if I have weight issues but again, risk is a factor I know Cargills cheque is more likely to cash than some brokers or feedlots out there

Grade risk is BRUTAL. Don’t know what our price is when we sign up because we don’t know the spread because we don’t know the quality.. played the durum game for years learned not to lock in a 1

[AlbertaFarmer5]

I thought grain cos didn’t own the grain? Which
One is it? Is anyone telling them if you don’t sign
There will be a consequence? Because that’s
Exactly what has distorted the whole balance
If you don’t sign a contract you won’t deliver
That’s a huge factor.

Why can't you wait until the grain is in the bin to sign a contract that you know you can deliver on?

Why are so many farmers so eager to sell into what historically is the lowest markets of the year?

[furrowtickler]

The ag Industry as a whole has pushed guys into contracts for fall delivery on a few fronts .
1 . fall cash flow for inputs
2 . grain movement - no contract no movement at all till December or later , period
3 . early input buying - if you don’t buy early , inputs will be up 30% after December
4 . Very , very few can operate without fall grain movement and cash flow.
5. Bin space on farm , most have bin space for maybe 75% average yields, some have more in areas that have better weather the past 10 years .
6. Many were told not to worry there will be lots around to fill contracts........ but that becomes the individuals risk factor .

We should be covered as we should still get 30- 40% of a crop and are at our standard 20% or so , but many will not due to a very extreme drought situation.
Not saying who or what should or should not help but some of the comments here are truly ignorant to be honest .
Each producer has their own responsibility as to what they sign for sure , but to be condescending as to what others do is plain ignorant IMO.
No doubt some are heavy on contracts and yes they made their own bed but there is back ground issues behind a lot .
Some areas have had not much luck the past 5 years and seen an opportunity for decent prices for the first time in years to pre price at least some potential profit on an average crop . Most were reasonably contracted, some went balls deep and it is unfortunate now . But to wag fingers now after the fact is kinda spineless but not surprising from some here.

[Sodbuster]

I don’t think many of us dispute that if you sign a contract for X amount of bushels for X amount a price that you should have to deliver that amount or pay whatever the difference is in price of what the contract is and what the price is now. The point of contention is what will the grain companies charge for penalties I do believe that the government should step in or a third party if grain companies start charging exorbitant fees for getting out of a contract, over and above the difference in grain prices or get greedy with grading. Alternatively the grain companies could roll contracts to next year and charge the difference in price and a small fee for rolling. In no way should the government step in to compensate farmers for the difference in the contract price and the buyout price.

[AlbertaFarmer5]

risk is a factor I know Cargills cheque is more likely to cash than some brokers or feedlots out there

Bingo again.

And that is because Cargill is not speculating on the grain you sold them, whereas the feedlot could be open to unlimited risk and loss if they don't also have the cattle price and grain price locked in. Although most modern feedlots also hedge everything when possible.

[farmboy44]

Why can't you wait until the grain is in the bin to sign a contract that you know you can deliver on?

Why are so many farmers so eager to sell into what historically is the lowest markets of the year?

Winters are for Mexico, spring is for seeding, summers are for the lake.

But really.. Cash flow, bills due, bin space.

[farmboy44]

Bingo again.

And that is because Cargill is not speculating on the grain you sold them, whereas the feedlot could be open to unlimited risk and loss if they don't also have the cattle price and grain price locked in. Although most modern feedlots also hedge everything when possible.

it’s a shame that whether or not the guy who is paying us is going to be good for it has to be such a factor in marketing


But by that measure; the graincos could say it’s a shame that the whether or not the guy who is supplying the grain is going to be good for it is such a factor as well

We expect buyers to uphold their end of the deal… should we be surprised they expect the same?

[AlbertaFarmer5]

it’s a shame that whether or not the guy who is paying us is going to be good for it has to be such a factor in marketing


But by that measure; the graincos could say it’s a shame that the whether or not the guy who is supplying the grain is going to be good for it is such a factor as well

We expect buyers to uphold their end of the deal… should we be surprised they expect the same?

It is a big factor in my marketing of feed grain. I will happily take a slightly lower price and deliver grain myself at the elevator vs using a broker(s) and 3rd party trucking.
Knowing that I WILL get paid, knowing their won't be discrepancies in the scale tickets, knowing that grade issues and potential discounts will be known and dealt with immediately, and paper blended with all other loads, knowing that the load will be sampled properly, not one handful off the top, or bottom representing 44 tonnes, not risking that any of the brokers and the end user involved go insolvent before I get paid.

Many times I have feed grain cheques of amounts less than proper. When confronted with the mistake, they make it right, but don't offer any excuse, it seems to be just throw it at the wall and see what sticks, most must not notice, so they keep trying?

[Highlander]

I guess every area is different but as a rule we never commit a bushel to a contract before it’s grown and in the bin and haven’t had any issues with fall delivery if we desire to do so. Usually start delivering cereals in mid December to a small degree followed by pulses and oil seeds in February to June. South central sask. Everyones need for cashflow is different but as some have said here there are some very useful tools to meet those needs without making physical sales during or immediately following harvest.

[Guest]

[QUOTE=farmboy44;502712]I was agreeing with bucket alluding to if producers get a bail out for things going against them this year, why shouldn’t graincos get to argue it the opposite way another year. Bad precedent

Why didn’t you get the futures price plus posted basis? Where you the fella who left his july futures unpriced until June 30? Last traded price and highest bid are two very different things when volume is gone and it’s expiry day. I explained it a few weeks ago I can did up the post.

If graincos spec for feed barley weight is 50lbs that is because they have export sales and 1cw spec is 50lbs… 303g. Domestic feedlots likely have a bit softer spec, Ill be marketing some to them if I have weight issues but again, risk is a factor I know Cargills cheque is more likely to cash than some brokers or feedlots out there

Grade risk is BRUTAL. Don’t know what our price is when we sign up because we don’t know the spread because we don’t know the quality.. played the durum game for years learned not to lock in a 1[/QUOTE


Yes I “where” the fella
I had a locked in basis , a contract that said I could sell up to the last day at 11:00 am at +62 plus posted July futures
No where did it say there had to be a buyer ?
Not my *** problem ? There was obviously a sale at that price?
They made the contract