Grain Marketing for Dummies

[Hopperbin]

Oh come on now. Pre sellers of wheat and durum got ****ed plain and simple. 6 dollar discount on 6 dollar price equals 0. Just ran it past the 5 year old to confirm. I am correct. Talk to my 5 year old.

[theplowboy]

I agree
we sold some canola and soybeans

[charliep]

My own advice is to get a little bit of background but the big thing is just do with a small volume. Lots of guys take the courses but run out of steam when they have to go through the paper work at the brokerage firm. Like farming you have to get your hands.

A second thought would be to remember futures/options are just a tool/method to accomplish something. Just like your tractor isn't a shiny green/red thing that impresses - its a part of your business that does things to make money. So the first question should be I want to accomplish this goal in my marketing plan - which one of the contracts including futures/options will help me do that.

Finally, have a clear understanding when you are hedging and when you are speculating.

[macdon02]

I look at it this way, I am long any time grain in the bin or field. Gonna seed next year? How about year after that? Guess what... Im long again. Id get grain in the bin and figure it was gold and maybe Id like to have a birthday party for it, cake and streamers and all my friends over..... Last Dec that all changed I switched to bear mentality, got some live quotes with a fancy charting package. Watching live quotes is nothing like watching barchart once or twice a day, I cant get a "feel" for a market without it. After using live for awhile things make alot more sense then before. Really cant appreciate a report day until you got 1 or 5 min charts of corn beans and wheat up. The velocity of money on shocker numbers is something else to watch. Lots of info you can get with these packages, depth of market ladder, (the asks and bids. Watching the market on report day gives a person alot more respect for it. Not quite so easy to hedge the farm knowing the possibilities. Do I trade? you bet, having skin in the game makes me pay attention moreso then just grain in the bin or crop in the crop. Not sure why cause 1 lousy contract is nothing compared to a whole crop. It takes alot of cajones to reown the whole crop, not to mention time to take care of it. Grain in the bin might be easier, less emotion. LOL

[theplowboy]

That is a great perspective Macdon.
I never really thought of it that way but you are right.
Need to reduce your long position.
thanks

[rockpile]

Let's put on the brakes for a second and just take a look at how this whole marketing (selling) system works. Is there not something fundamentally wrong with a system where you have to "buy" a price for a product you own? This whole squirrel cage suggests to me that it was created for one single purpose - to divorce commodity prices from commodity value and handing that value over to what are nothing more than carpetbaggers. Adam Smith described it best in "Wealth of Nations". Paying the producer just enough to cause him to produce again. And Charlie, that line between hedger and speculator is a fuzzy one, if it even exists.

[Braveheart]

Rock pile, correct analysis. If one overlays long term commodity charts with long term cost of production you find the charts converging or moving towards converging.

It's a poorly kept secret that commodity prices near or at breakeven keep the industry going. Farmers, the eternal optimists, will always chase that next monster crop, or record price or both. Breakeven keeps them in the chase.

The way to make a buck is to have production costs lower than average, or somehow sell for consistently higher prices than the average.

[macdon02]

Passed on to me from a VERY GOOD borker from Manhattan, Kansas. Cost of Carry Calculation = Cash price x interest rate x time(.083)one month commercial storage cost(he uses $.05/month. So for example canola at $9x.05x.083=.0375 .05= $.0875/month. Fwiw the ticker starts when it goes in the bin instead of the pit.

[Klause]

hopper did you sell any 7 dollar #2 hrs or $12 canola this fall?


Cause we did. we also own some paper right now.

[Klause]

Guess it may be hard to tell.... I was bugging hopper. Lol.

Got a 40 of single malt here... will bring it over on the weekend.