This peas and lentil thing is upsetting. WTF will farmers grow in 2018. Canola at $8

[wmoebis]

Everyone talks about signing good prices for grain they don't have ...let's say this drought took hold this past year and you were holding a 9 dollar pea contract with no crop and the price went to 15....


Or you had a 9 dollar contract and the price drops and the grain cos won't take delivery.....


Net result is shit rolls downhill...farmers have zero people in their corner....zero...

Bombardier....AGT. ...manufacturers. ...all have government backing.....

We have nothing....

I don't understand markets so help me. If there was $9 markets why didn't grain Co pre sell the whole crop and be able to offer that price all the way through. That seems to be the recomendation all experts are telling farmers they should have done. Same with wheat back in July.

[agstar77]

Maybe it will bring some reality to land values. All I have heard over the last number of years is how much growers have made on lentils. Well nothing lasts forever.

[bucket]

Wmoebis

Grain cos would never take that position....they can't afford it that's why they lay the risk onto primary producers....they can hold farmers hostage for their grain needs...

[sumdumguy]

I don't understand markets so help me. If there was $9 markets why didn't grain Co pre sell the whole crop and be able to offer that price all the way through. That seems to be the recomendation all experts are telling farmers they should have done. Same with wheat back in July.

How do you know that they didn't hedge this crop? Maybe they did but the profits aren't our profits.

[macdon02]

Because if they are wrong wmoebis, they are done. It's the difference between speculating and hedging. So they simply offset the producers sales with futures contract. We don't want them going broke as much as we might wish some days .... The office is dealing with currency, basis and their actual sale as different pricing components. So there's still opportunity to get blitzed. Especially if they make fwd sales on say something like 14 pro back in July. As soon as the sale gets made on their end the hedge is lifted..... So they better have some ****ing 14 or they need to flush it out with premiums or discounts. I suspect by Feb or march they'll start paying for 14 pro as a "premium" because they'll have no other choice but take the gas.

[bucket]

Because if they are wrong wmoebis, they are done. It's the difference between speculating and hedging. So they simply offset the producers sales with futures contract. We don't want them going broke as much as we might wish some days .... The office is dealing with currency, basis and their actual sale as different pricing components. So there's still opportunity to get blitzed. Especially if they make fwd sales on say something like 14 pro back in July. As soon as the sale gets made on their end the hedge is lifted..... So they better have some ****ing 14 or they need to flush it out with premiums or discounts. I suspect by Feb or march they'll start paying for 14 pro as a "premium" because they'll have no other choice but take the gas.

Your first sentence is why many farmers don't sign forward contracts as well....

No futures for peas lentils flax wheat durum mustard in Canada. ...where would the grain cos lay off that risk? To the primary producer by controlling delivery.....

[bigzee]

“I’m locking the bins”. Likely the most used phrase in the farming industry. Have a neighbour who didn’t sell any reds from 16, he told me that exact line. After this crop he reiterated the exact words. Then he asked me what I would do. Firstly, I told him locking the bin does nothing but create more problems down the road. I said reds will drop to the teens, he laughed and said never.
He asked me what I’m going to do? Told him I made the best move all yr, sold all reds at .30 switched to small greens. Hey he asked for my opinion.
Then recently a good friend advised me to sell all remaining small greens, took his advice now they are down to .28
No things aren’t looking good good! It’s all production, and that’s the problem. But I agree it’s going to be hard to decide which crops are going to make a viable return.

[farming101]

Well if they did hedge it is not evident or they didn't do near enough.

I would imagine most hedging would be foreign exchange risk related

[bucket]

How do you hedge against an arbitrary closure of a market by imposing an import tax on grain in transport.....

[dave4441]

I don't understand markets so help me. If there was $9 markets why didn't grain Co pre sell the whole crop and be able to offer that price all the way through. That seems to be the recomendation all experts are telling farmers they should have done. Same with wheat back in July.

I think most responsible companies would not have massive shorts or massive longs but will always trade from one side or the other. You can't be long in a falling market. Can't be short in a rising market. No company is ever perfectly hedged but i bet line companies where more of a seller this fall then a buyer. If they do take the risk and are correct they will keep the margin. If they are wrong they will have to eat the loss too. Lenders also have control on this long and short position. It's just not allowed in massive amounts.

Check out the book "Merchants of Grain" if anyone wants some reading on this part of the grain trade. Was some real cowboys in the grain trade years ago.

[sumdumguy]

I think most responsible companies would not have massive shorts or massive longs but will always trade from one side or the other. You can't be long in a falling market. Can't be short in a rising market. No company is ever perfectly hedged but i bet line companies where more of a seller this fall then a buyer. If they do take the risk and are correct they will keep the margin. If they are wrong they will have to eat the loss too. Lenders also have control on this long and short position. It's just not allowed in massive amounts.

Check out the book "Merchants of Grain" if anyone wants some reading on this part of the grain trade. Was some real cowboys in the grain trade years ago.

Will do, thanx.

[sumdumguy]

I think I understand what you are saying Dave about taking long and short positions, but I am pretty sure every time a production contract is signed at the marketer's desk, he takes a position, as in he pre-sells a portion of the specified product. The ptoblem arises when India, Mexico or China can buy lentils from Kazakistan at half the landed price. I'll just leave it at that, let's just guess what happens.

[bucket]

Still are Cowboys in the grain trade....lagging contract fulfilment. ...poor delivery....railways leaving cars sit for weeks....graincos that won't expand facilities to meet railway requirements they knew about decades ago.....

Collusion is celebrated.....

They have a new generation to prey on....

[dave4441]

Yep Farming, it is amazing to see the number of big new plants going up. You would think there is money in processing. Dave, give us the scoop. I have my experience and opinions but it is better to hear it from the new guys.

I think plant based protiens are going to be massive. But also there will be some stumbling. To date we only have a few small players and AGT which i believe is mainly producing in USA which is where the demand is. Is it viable to extract starch and protien in Canada and transport to where the food production is? I am not totally sure.

Klause made a comment on splitting everything in Canada. Transport costs would kill most of this as it doesn't get any cheaper then bulk conventional vessel freight (at least today and last 5 years). Cost is about USD $115/MT from Sask Plant to India by container and USD $85 by boat from Sask Elevator. This is a CAD $1/bushel to grower difference in price and that cost will be there if it is whole seed or processe ingredients in containers. Plus this is an expensive place to split product due to winter and labor costs. Will this type of transport costs matter from Sask to east and west coast USA where population is? It may at some point. I still think that value added will be critical in future but you won't see enough capacity to make a difference on this current price slump. Likely India drought or something happens to change markets before then, but it sure could stabilize the next price slump. Pasta is same. We have known for a long time that producing pasta on prairies is not feasible. This is my long term worry about this move to ingredients in Sask. I am willing to bet a bit financially on it but not betting the farm either.

Saying that we are going to start splitting pulses in fall and would hope to look at ingredients in future. Taking off seed coat is first step.

The James Cameron/Delisle plant is supposed to do 160,000 MT of organic peas in fall. Where they will ever find that amount of organic product i have no idea. I suspect reality is more like 25000 to 40000 MT of product based on the size of the operation. I think all of this will grow more slowly then we would like.

[dave4441]

I think I understand what you are saying Dave about taking long and short positions, but I am pretty sure every time a production contract is signed at the marketer's desk, he takes a position, as in he pre-sells a portion of the specified product. The ptoblem arises when India, Mexico or China can buy lentils from Kazakistan at half the landed price. I'll just leave it at that, let's just guess what happens.

The issue is much of our special crop sales are into destinations that are pretty wonky at best. India will do whatever it can right now to drop it's international trade due to a glut of product. To stop companies in the country from taking advantage of their people and try and be self sufficient. Which is a normal response not to purchase if they can. But, it will create a huge issue down the road for them. They will not be long term self sufficient in all grains.

I was in China at the time of the blackleg issue and i was told what the issue was on canola imports. Basically the govt was bound to buy all the canola from domestic producers but the crushers wanted Canadian product instead because it was better quality so they wouldnt buy the domestic stuff. Govt had 2 or 3 years of purchases from the growers stockpiled so they had to force the crushers to buy it instead of importing even more. Not that sinister when you understand the issue. India is same story.