Red Lentils, how high can they go?

[gustgd]

Spot price for #2reds is now .27c//lb.
As early as July they were 18c
Yields around here are below average and quality is getting worse.

Unfortunately we've sold a large portion last January and the price stayed similar until July. But since then it's been on a steady climb.

Are these highs short term covering to fill boats, or will they reach the highs of .45c of a few years ago?

We can cover costs with small profit at .14c but man to lose a potential > $6.00 bus hurts.

If we get a half normal fall there will be lots of extra dollars in lentil country.

Does anyone have insight on how the large processors cover their needs?
At what point do boats get cancelled?
At what point do they get filled with yellow peas?

[farmaholic]

Kinds hurts to leave that much money on the table, but you know the saying about hindsight. Also hurts to watch Mother Nature eat away at the potential. Durum may be another of those scenarios....

Good luck with harvest. If your suffering loses from neglect look in the mirror, if the loses are out of your control, and you've done the best you could.... enough said.

[Hopalong]

Agree, look ahead, not back.
Rotted piles of grain where the owners could not decide how much was enough to sell for are a much worse decision.

[sumdumguy]

Those forwar

[sumdumguy]

What happened? Those forward-sold contracts have got to be filled. In 1994, Canaryseed got to 54.5 cents a pound as companies that I will not name got into huge pissing matches. Green lentil got up around 45 cents a pound. There were fortunes made people with bins of carryover unloaded.

Marketers were squeezed as they couldn't fill the sales they made. That was when some didn't make it out of the eye of that storm. Forward-selling is not a game for the faint of heart.

[Maverick]

Production contracts are just part of a smart marketing plan. What if the weather this fall was perfect? Hindsight has nothing to do with it....its all about profitability. Is the current price higher? Great. More profit. Simple.

[farmaholic]

Maverick. Your absolutely right, it isn't hindsight that makes the difference, there is nothing you can do about previously made choices. BUT as you say a little foresight doesn't hurt, choices made are made with information at hand at that time. Cant change the choice after its made or the events that occured after that choice. Show me a man who has made no mistakes and that'll be a man whose done nothing.

[dave4441]

Don't be surprised if demand moves towards cheaper lower grade product. This isn't about short covering it's about extension of old crop values due to slow harvest. 2010 taught the world how to utilize low quality reds. X3 is 1.5 percent points higher damage which equates to a slightly low split yield. Maybe 2 or 3 percent lower yet price will be 20 percent lower. Story on reds has not been written yet and no one really understands what this mkt will do.

[furrowtickler]

Dave what are your thoughts on good green peas?

[farmaholic]

Furrow, are we supposed to read that post with a tone of sarcasm?

[JDGreen]

So Dave as a buyer knowing that split yield is only 2-3% lower on an X3 let's say.. Yet price is 20% lower.. Why is an X3 not discounted on its additional damage rather than a flat 20-25% discount? Your pretty much admitting what we already know... X3 and 3 Pricing is a screw job not based on anything but a number picked out of the air.. This needs to change to a total damage based system..

[dave4441]

I agree. But have no idea how it happens.

Number 3 is a different story. Damage is higher as is, generally, bleach and copper and split yield drops way off.

Green Peas I have no clue.

[gustgd]

Thanks Dave

Agree story on reds is far from over.

There will be a lot of lessons learned on marketing non hedgable commodities on this farm

Getting grade spreads and buyouts in writing before I sign another crop that's not in the bin. This includes durum.

Saw a guy at the elevator yesterday looking to sell his lentils.

Got spot price of .27c. He said he never sold any pre harvest. "Was to busy to think about it"

I imagine, this fellow would normally be as "cash poor" as most farmers in Sept.

I don't know how I could sleep with no plan for cash flow other than to take what's offered at harvest.