beans

[ado089]

Charlie has a very good point, money can be put to work other ways and I don't know about you guys but there isn't much more of a sickening feeling than looking out the window in Jan and seeing all the bins but one have frost on them. If you're concerened about missing market movement buy an option and play market moves on paper.

[checking]

Someone must have a better ponzi scheme than I can find to achieve those eight month interest rates off not storing/storing grain! That carry cost really depends on when you began accumulating your granery space. Not very long ago a 2000 bushel unassembled hopper bin had a price tag of $1200.00 for the hopper, $700.00 for a skid, and $1900.00 for the bin. At farm auction, I believe I can more than break even on them. Best advise I ever heard was from a Redriver farmer. He achieved his position of, "one in the bank, one in the bins, and one in the field." If anyone is truly saying you need every produced bushel to cover your costs, won't store, has to be delivered off the combine, or buy paper, I think you are in the wrong business.

[ado089]

So you're saying last year if you would have sold your canola @ $16/bu but you though it was going higher so you buy a 60 cent option and even though you didn't exercixe that option you still net $15.40 you're not as smart as the guy that held out for $x/bu and is now sitting on $9/bu canola. Give me a break. Growing the crop is the easy part, selling it is where the dollars are made. A hunting friend of mine says "a bird in hand is worth 10 on the wing" You're in the wrong buisness if you're not taking advantage of these risk management tools and there isn't another industry out there that aims to cary any more inventory than needed. Cash is king and it's not always about earning intrest on it, it could be saving 7% for early buying seed or in most year a few hundred dollars on early buy fert, a hot stock tip or even a cash sale on more bins. Your imagination is the only limitation on what you can do with cash but you're pretty limited with what you can do with a bin full of canola. Even if you're deffering money you're not on the hook for storage risk.

[timm]

My neighbour sold canola off combine 40 something basis then rolled a couple of times ..ended up with 70 dollar basis ...sold few weeks ago net 8.50 bu all because of lack of storage.he's building 4. 600000 bu bins as I type.

[pilpilsner]

I've got a hold position on canola
But that nia dyodd
I like the one in bank one in the field and one in the bin advice

[checking]

How well do you believe that Redriver farmer sleeps at night knowing where his inventory is verses the guy that forced himself (had no option but) to sell his grain off the combine to buy paper? I'd say the Redriver farmer knows where his bird is and doesn't stress himself out on carrying cost. I find it strange that die-hard paper players suddenly put up 200,000 bushels of storage, and have grain bags all over the country side because inventory is a bad idea. I'd say it was the best insurance any farmer could carry.

[checking]

Most who carry grain gave no idea how to figure a carrying cost.

Those who don't own it on paper, usually don't know how, and hate the guys that say they do it.

CASH IS KING!!!

Grain inventory is not cash boys.

[checking]

Hey! I could become a "cross" checker, but you as a young whipper "snapper" should not be throwing words around like "hate". I totally believe Charliep and his $16.00/tonne, but so what. I presently don't have a need to cash in my very comfortable security blanket inventory, but I can see those with a paper craving as having more risk to deal with than with my method of hold it and sell it when I need to. Seriously, why go to the trouble of trying to grow a crop if your real interest is in shuffling paper where the real money is. You are in the wrong business. You need to let your farm go to the muddlers like myself.

[charliep]

Trying to steer down the center of this one. Nothing wrong with storing as long as costs are recognized in the context of an individual business objectives/marketing plan.

One place comment though is on flipping contract months on things like basis contracts and having futures carry costs included in the new basis (example of having a canola basis widen from $40 to $70). This applies to CWB fixed price contracts and canola. I can comment I have only seen this work out less than 10 % of the time. First comment is to pay attention to these contracts and pull the trigger on price well ahead of expiry. If you get yourself in the bind of a contract coming to the end/poor price, pull the trigger anyway/price out and replace with calls/long futures. Once you have removed basis from the calculation, futures/cash values will move together. More cash in your pocket and the monthly statement which highlights in spades whether you made a good decision or a bad one.

[ado089]

I guess I wasn't saying don't have storage either after all March is typicaly the best time to move canola and if there is any significant contango in the market you need to forward market that high month. (Anyone jump on $11 March last week?) But if you think that having bins makes you exempt from knowing and exercising your marketing options you're a fool. You're marketing will have a bigger impact on your bottom line than anything you can cut from you inputs. Remember it takes 250lbs of fert to grow 2200lb of grain. That means getting an extra $10/mt on you grain is the same as saving $100/mt on your fert. I know where I focus my efforts.