Tough call for IMC growers!

[ado089]

Not enough liquidity is grain buyer speak for "we're not sure we can make money off you yet so we won't commit". I also like the game they're playing with basiss contracts based off of July futures. They do that as a tactic to bait you into, typicaly a poor performing month, in hopes that start rolling to Nov and eventualy Jan as it is typicaly a higher month as a result eating up your basis premium. The Nexera contracts are built the same way. Besides that it telegraphs when grain will be deliverd so the buyer don't have to speculate as much.

That however is not my issue...I have no problem having to come up with product I contracted to deliver, however I expect the same in return. Meaning that if I contract 40bu I get to deliver 40bu, if not I get paid storage and damages. But if you look closely at any grain contract at some point in it the words "buyers call" will be found, exempting them from any obligation to take that product. I challenge you to get that removed from your contract. Let me know how that goes.

How many people still have old crop CSO or had to hold on to it (without payment) long after the conract date this year?

[ado089]

As for the original question...Nexera is simply a production contract until you either make delivery, lock in a basis or price it. They however will let you deliver regular canola against any priced product in the event of a wreck. Mind you they to have had issues with taking delivery in the past as well.

[Hopperbin]

Cargill could not take my IMC Canola in April of this year because of crush problems supposedly and took the Canola in May instead. They paid me an extra 6 dollars per ton for basis difference.

Ado, Buyer's Call I cannot find on the contract unless I missed it. The closest thing I can find is on the back of the contract terms and conditions number 1(b)
If Cargill is unable to receive the grain at the end of the Delivery Period, then the Delivery Period shall be deemed to be extended for a period of 90 days. If Cargill is unable to receive the grain within 90 days after the Delivery Period, the Customer shall have the option of a) terminating the contract and paying or receiving any increase decrease between the contract price and Cargill's current Bid or b)deliverying at a later time at the contract price at a date to be selected by the Customer.

According to this if they do not take the Canola they must pay you damages if the market goes down and you are forced to resell for less. Hmmm don't pay for cost of storage or interest though.

[countryguy]

Why is a 90 day contract not a 90 day contract for BOTH parties? You sign it thinking you can deliver for cashflow needs but they can take the grain legally anytime they want in the next 6 bloody months!! And when it comes time to pay the bill that you now don't have cash for there is no mercy.Pay up.Right now! Farmers (myself included) are absolute idiots for letting these companies get away with this shit!!

[furrowtickler]

Countryguy, your absolutely right. No obligation at all on their part and every obligation for the farmer. What's that saying - oh yeah - "JUST SAY NO".

[may-be]

Had this problem 2 years ago. Grew wourbiton wheat and made some contracts to haul product of the feild at a lower price for lack of bin space for that year...Ended up I never got to haul one bushel till the last day of october and my wheat did not move till june,july...And my buyer wounders why I moved on? Been pleased with my current crops and movement.

[charliep]

I should likely know better than to do this this but I will highlight why IMC/Nexera canola is important and that is the market/consumer.

Issues around dietary transfats are first and foremost in many dieticians and health proffessional minds. You can look at the number of cities and regions that are in the process of banning trans fats in vegoils. You can also read labels at the super market that read transfat free. The new specialty oil canola varieties have given us a leg up in these markets and I would argue why Canada has moved from 3.5 MMT crush capacity to over 6 MMT within the next couple of years. Soybeans is not that far away in developing their own lower trans fat varieties.

Will let the discussion go on market signals, value distribution and contract enforcement but it is important to understand the direction consumers are taking the industry/steps that need to be taken.

[ado089]

I don't know hopper, when I read "terminating the contract and paying or receiving any increase decrease between the contract price and Cargill's current Bid" it would suggest that if the price went up you get paid, but if the price goes down you would have to pay. Beside that, 90 days is a long time, that's three months. Try telling them that you want to extend paying your fert bill without consequence for 90 days and see how that goes. I'm not trying to pick on Cargill here, they are all equally guilty of stripping away any recourse you have with small print.

Charlie is very right on the importance of the healthy oil move. Canola was first out of the gate but beans are not far behind and if we drop the ball on supplying this market we'll never get it back. It would be nice to get paid accordingly for the extra quality of these new oils though. Oil made from Nexera lasts 10 times longer in a fryer than regular oil, shouldn't we then be getting paid 10x for that canola not just $50/mt...just a thought.

[Hopperbin]

Have to agree 90 days is way to long, and the money is not getting down to the farmer for the extra premium, maybe the premium is more market for canola on the whole. As far as that buyout the farmer has the option of I would think the farmer has the option of terminating without paying the difference if price goes that way.
Wasn't there a lot of contracts that got terminated with Bunge not long ago and the farmers simply sold at the new higher price?

[charliep]

Will note the issues on contracts have gone on for years but no resolution.

Is the cash clearinghouse concept sponsored by WBGA an alternative solution? A part of this process is standardized contracts with terms that are fair to all parties.

[parsley]

Let's quit bitching and create a farmer friendly contract.

Get out your contract.

With white out, paste out your personal details.

Scan it.
email it to me. parsley2008@live.ca

I'll post it on my blog.

Farmers can then post in the comments and draw attention to the sentences you think are the pits. The ones that get you in trouble.We can delete or modify the sentences that advantage the companies.

I can continue modifying the contract right online as we go along.

Want to do that?

At the end, farmes could have a contract for every commodity, but one that is farmer friendly.

Either the grain company signs it or stuffs it.

Your call.
Pars

[parsley]

Or you can fax it to me
739-2900 Pars