"Contract squeeze worries farmers " is the WP headline

[the big wheel]

Jeez for such a tough guy who makes threats on the internet I’m amazed how easily you bend over and allow these companies to “force” you to sign contracts

Name a company that hasn’t been preaching if you don’t sign a contract
You won’t deliver because there’s just so much grain out there? Lmao!

You haven’t seen your own memos last fall on the glut of canola?

And we haven’t even touched on the fact that now that these same companies
Are doing the crushing are they buying for
The highest price or lowest price? Do they not have access to what their price
For oil is further out therefore now have even more advantage and desire to manipulate
Our price?

[farmboy44]

Name a company that hasn’t been preaching if you don’t sign a contract
You won’t deliver because there’s just so much grain out there? Lmao!

You haven’t seen your own memos last fall on the glut of canola?

And we haven’t even touched on the fact that now that these same companies
Are doing the crushing are they buying for
The highest price or lowest price? Do they not have access to what their price
For oil is further out therefore now have even more advantage and desire to manipulate
Our price?

Crushers have finite capacity, it stands to reason that they book up and close windows. Elevator seems to take spot during harvest more often than not. If I need movement during harvest theres options I can usually find someone to take my grain though not always yes

I can’t really comprehend the back end of this rant? What do you mean my own memo? Are you concussed?

[shtferbrains]

When ADM bought the Lloyd canola plant from UGG they were kind of market disrupters because the bought canola with live futures offset meaning when you said you wanted to sell 200 te one of the traders in the room was live with thier broker and offset it the minute the purchased it.
They could run a tighter basis because they didn't have to cover the risk of price movements on the days trade like the line companies who were settling only twice a day when all the local agents sent their purchases in.

[blackpowder]

You do realize Big Wheel that you yourself are a grain company too.

[the big wheel]

You do realize Big Wheel that you yourself are a grain company too.

Now that you mentioned it I guess it’s not so bad I can screw myself now!
Thanks

[farmboy44]

Now that you mentioned it I guess it’s not so bad I can screw myself now!
Thanks

I did get a laugh out of this one

This year has us all a little on edge clearly

Have a good night

[the big wheel]

I’m pretty sure when you make a contract with the grain company they sell the futures market at that price. They cannot take the risk of open contracts, the only benefit of selling through the elevator is delivery time and possibly basis.
It’s much less risky to do a futures contract on your own and protect it with out of the money calls, if you have any production concerns. No one is going to bail you out of this either by the way. The other alternative is options, I’m sure Errol would gladly help you out with either.

Why is it that anyone who’s made a contract without the physical thinks they should be let off the hook??
Why the resentment to the elevator? Yes they make money on our product, if they didn’t why would they bother. We need them, they need us, but blaming them for your contract makes zero sense.
We’re all grown men here aren’t we?
All of the tools are there to protect yourself, many elevators will help you out with it if needed.

I assume your referring to me. I don’t have any contracts crop was screwed from the start, neighbour’s do and I don’t blame them either. We re in a spot as blaithlin mentioned prices were attractive and quite frankly with poor production if you don’t get 20 bucks plus you’re in deep trouble. Grain cos we’re talking down prices and those prices in the spring were attractive. Haven’t all of you been getting the emails predicting lower canola prices? How the hell
Is that our crop and many world countries crops getting less but he day.
Why is it someone who doesn’t have the physical think they should be off the hook? Why should the buyer be off the hook of risk? Why do you accept the brainwash that this is the way it has to be? It doesn’t it’s dumb that it’s this way dumb for us smart for everyone else up the chain. If the buyer instead of us would be at risk would they not have the option to purchase or not the current price of real available grain and if they did at a higher price can they not pass that on to consumers? How do we pass that on to consumers? We can’t which is why this is ridiculous. It’s quite simple we offer to produce at a price they agree if we can’t fulfill it to weather they then do what ever they want buy it or don’t buy the current market no where near the damage to anyone occurs and the closer we d be to a free market. I remember cotton having quite the opinions on this.

[TOM4CWB]

They don’t have to hedge the futures.. several commodities (durum, flax, peas, lentils) have no futures component.

However the farmer didnt deliver the grain, therefore they are in breach of the contract. Companies also make sales based on the cost basis of their ownership. Do they get to just tell their buyer next year?

Do you really think you should be allowed to just contract at 11, not deliver, and sell it across the street for 20 bucks?

In Alberta we have the 'variable price benefit' built into our Crop Insurance.

Shortages of insured crop production will be paid out at the average daily prices in October 2021.

So if we have production we fill the hedged contract to our grain buyer. Anyone who pre-priced without insurance coverage... to offset the losses... won't be in business long, and I know Cargill was very touchy about doing pre-pricing contracts without a formal risk management plan discussed and on the table.

Some line companies do carry weather insurance, so if genuine short production backed by crop insurance audit can be proven, it can result in special terms on the shortages if growers are honest and discus beforehand when the actual shortage on production becomes evident... like right now if your crop is toast.

My job is to make sure we are not short on contracts, and to use our farms futures account to trade options and futures, for speculative future sales at good prices, which is my risk and costs real money and time.

Cheers

P.S. This is why the CWB got put in place initially in the 1930's, cause the prairie pools got caught short... and couldn't deliver so were bankrupt without a huge gov bailout!

[samhill]

It’s not hard to understand, sign a contract, it’s a contract.

[AlbertaFarmer5]

Thank you to Farmboy44 for trying to dispel some myths. Unfortunately, some people are perpetually convinced that the man is out to get them, and no amount of logic will convince them otherwise.

Correct me if I am wrong, but aren't the line companies legally forbidden from speculating? Aren't there limits on how long or how large of open positions they can have at any time? And they are very short.

As soon as you sign a futures contract with them, they always immediately sell it to the importer or processor ( or sell the futures) at that price plus elevation fees and profit margin.
If you don't deliver your $12 canola, they would have to go back to the market and buy $20 canola to fill their obligation to the end user. They literally take your $8 spread and use it to buy $20 canola on the open market to fill the sales they had on the books at $12. Their sales would also be subject to penalties for not delivering and costs to roll. Those have to pass those costs back to the party who originally broke the contract.
There is nothing nefarious about it. They are not making a dime off the farmer. No elevator signed a $12 canola contract with you last fall for OCt 21 delivery, then waited till now and sold it for $20 and pocketed the $8. Thier margins were likely the same at $8 as they are at $20.