Hot and Dry and Canola prices crash day two!

[tweety]

Charliep, that generally is the way it is here in SK. Success is rarely admired by most. Not all, but most.

SF3 is pretty much the norm.

[hobbyfrmr]

Jwab, there is a truth in what you describe. I had a fishing trip with a very good friend of mine, we , (the farmer bunch) described the weather and nonsense market risks which we are subject to everyday. The working/ trying to diversify in other ventures guys had many good points as to where we the farmers are offered risk management tools to buy or not buy. These tools are not offered to other weather dependant industries like building construction, track hoe operator, road construction, carnival owners, ice cream shacks, small town pubs and several other ventures we discussed.
The conclusion was, any revenues (govt programs) outside of risk management program collections are simply used to bid up higher rents, higher land prices and new machinery. Larger farms pay big to have their specialists describe the programs in detail and discuss actions to maximize payment. I dont like it, But thats the way it is in a highly competitive farming environment. The reality is, its up to me to hire an accounting firm that is very well studied in agriculture programs. My large acre , high efficient , large volume producer neighbors dont just think about cost of production, they are watching interest rates, land values,making grain sales, fertilizer purchases up to 2 years in advance. They are far more skilled managers than myself for sure. Thats why they farm/control more land than I ever will! When all the fuss is over, their end game is land ownership. All the labourers will seek work elsewhere, the lease machines will go back to dealer, the rest to auction and these guys will have collected a very large farmland base to sell or rent out.

[dmlfarmer]

Charlie made a very important point! The more we say we have no crop, the less sales grain companies pursue. Most grain companies are multinational and will source grain for sales anywhere in the world. They book sales based on expected production. If we as farmers keep telling them the prairies have no crop they will not plan on selling any prairie production. Prices will not go up if there are no sales made!

Grain trading is a margin business. They really do not care about production problem other than knowing what side of the trade to be on at a given time.

Grain marketing is like playing poker. We know the hand we are dealt, yet instead of hiding that hand we jump up and down screaming how poor it is. Wake up folks, it is time we learned to play the grain poker game too and bullshit like the governments, traders, and grain companies do. If you want a higher price it is time to be telling everyone crops are improving and we will have lots to sell. Then come fall when reality hits the trade watch the prices rise!

[charliep]

Frustrated. I assume you read the Alberta crop report before you made the comment. I note the map and the general deterioration of crop conditions.

I note crop reports are read by a lot of people including importers. Are suggesting they should take all their business to other exporters because Canada won't even have one kernel of canola/other crops for sale. Perhaps the message to importers should be the realities of dry conditions on crop production but western Canada will have some available for export. The realities for everyone in supply chain is they will have to pay attention as the summer unfolds. No one knows the final results of this years crop.

[charliep]

dmlfarmer

I agree that grain marketing is a margin business. It is also a volume business. A smaller crop (particularly regionalized) and smaller handle means less money.

A volatile market also makes managing price risk just that more difficult. Supply risk will also come into play and be felt in basis.

Will be a tough year for everyone in the grain industry.

[SASKFARMER3]

Oh did I hurt your feelings, suck it up butter cup!
Life and farming aren't easy.
I'm actually happy so far I got what I wanted a dry year!
Little dryer than I wanted but still the relentless rain stopped'

Grain companies Chen companies Fert companies equipment etc all need you mr farmer but they want all the cream and leave most with rotten cheese!

[dmlfarmer]

Charlie you are right in lower volumes mean less money, but only if basis remains constant. With next to no competition companies can (and have) widened the basis to increase profits. So we handle less but make more on every tonne. We are only going to turn our facilities 3 times instead of 6 so we have to increase our handling costs to reflect lower volumes and less turns.
Oh, and we also have to widen basis because of increased risk in sourcing grain. Therefore we cannot raise prices even if the crop may be short this year because our costs could go up.
Oh, and lets close a few facilities in short crop areas and let the farmers haul another 100 kms to next facility. It will save us money! Farmers will haul the extra 100 kms because they have less to haul so should not be a factor.

The whole game is rigged and unless we as farmers learn to play the game we lose! Got a great crop coming this year!!!

[charliep]

The year will prove us right or wrong. I will comment that there will be a difference in basis between having 40 trucks lined up at a grain companies drive way and 2 months behind on accepting DDC contracts and having a train sitting on your siding/not enough grain to fill it.

At the end of the day, the whole process is about having a ship arriving at port and developing the logistics to load it. That will be a grain companies risk this year.

[TASFarms]

Ice futures is rigged. End of story

[bucket]

Charliep

There is no risk to the graincos.

Some boats waited over a month to load on the last few weeks. They just dropped the price on the next boatload to make up for it.

Market and most farmers don't know that.