Fall contracts

[tweety]

Talking to a crusher yesterday and he is saying guys are phoning in and trying to back out of contracts. After half to a full hour of whining eventually the farmer gives up. Like its happening a lot - half his day!

Why do farmers make fall contracts and then think they can get out of them? Companies should never ever let farmers off the hook. They signed it, they pay up.

Otherwise it costs those who don't sign contracts. Smarten up whiny little ******* and pull the big boy pants on.

[bucket]

Tweety

I understand your point but shouldn't the same follow on the companies part.

March contract means March not June.

[tweety]

True, but then write penalties in for late acceptance. Never had a single company not accept the contract change.

[fjlip]

So to hesitate this year is smart? Indecision is going to pay for a change? Early bird got shot? First mouse gets the trap. The last shall be first?

[tweety]

If all these wealthy commissions want to do something get the rules changed so delivery month is delivery and pay month whether or not grain is delivered.

Now THAT's long term profitability.

[boarderbloke]

What should they do? They won't be able to deliver product so they'll have to buy out of some of the contract. Wouldn't the best thing to do now be, buy NOV canola before others do, ride it up and make so money to pay for the contract that you have to buy out of? What about shopping around for old crop that still in bins yet. Might have to pay up for it, but there might be less risk than buying NOV canola.

[charliep]

Perhaps these same farmers should be looking at other alternatives if they are in wreck/think they will have zero production. Rather than trying to buy out the contract, watch for market for dips (reason to hope for lower prices) and buy calls or replace with a long futures positions (use the premium cost to set stops). Everybody here is 100 % sure the market can only go up so there should be no risk in this position.

[charliep]

Last post too strong on the futures side. If you are in a crop write off situation/crop insurance claim, watch for the dips in prices as points to negotiate an exit from the contract. If you are not there (crop under severe stress but not a write off), look at some of the other alternatives.

[tweety]

If a guy only knew......

Buy nov right now and ride it up.

Or maybe down. Or just not worry about it.

[charliep]

I will be hated here and cursed at but a dip in prices may actually be good thing. I will get the privilege of listening to everyone bitch and complain but that would farmers with production shortfalls to negotiate out of contracts. Farmers production but don't like the price in their is another conversation. A dip in prices will also likely attract a lot of buyers as they try to cover their supply needs at least with a futures position.

Price volatility is not a bad. You just have to know how to use it.