Pooling grain at grain companies

[wmoebis]

How many farmers use the pooling option at grain companies like G3 and Richardson?

Why do they use it, I thought that was the main reason farmers got rid of pooling to get paid upfront not spread out over year.

What I have read is it is very popular. Just asking what makes it different now is all.

[ColevilleH2S]

Because you can, or can not be part of it. It's your choice. Not a politician's in Ottawa.


...and who is saying it's popular? It would be interesting to see the numbers. My guess is these futures price averaging programs only capture a low single digit percentage of tonnes.

[wmoebis]

Because you can, or can not be part of it. It's your choice. Not a politician's in Ottawa.


...and who is saying it's popular? It would be interesting to see the numbers. My guess is these futures price averaging programs only capture a low single digit percentage of tonnes.

Because I didn't even know it was a thing or available I asked AI and they said it was popular is all.
Yes it would be interesting to see the numbers but we don't have transparency, the other thing we said we wanted and would get. I agree!

[LEP]

I don't know one person that uses it.

[wmoebis]

I don't know one person that uses it.

I hadn't either that is why I brought it up.

Is there a wide variance between companies according to the sales they have made? Or is it kinda like gas prices here in town doesn't matter what happens in each company they all change prices to match each other within hrs of any changes.

[ColevilleH2S]

...
Is there a wide variance between companies according to the sales they have made?...

The way I understand the program (which may not be correct) you are locking in the current posted basis at the time of sale, and it's the futures price that gets averaged over the time period. There is no connection to the company's selling price for the grain.

[jdepape]

I think you have it right - it gives the average of the futures over the contract period. From what I've heard, I'm not clear about the basis. I've heard they lock in the basis at the time you enter the contract and I've also heard its the average over the contract period. Either way, I have two issues with this kind of contract.

(1) Why would you just hand over your grain to a buyer and accept their basis over time? Their posted basis is the worst it can be - practically all substantial business happens at better - to much better - basis levels.
(2) You don't need to get them to average the futures for you - you can do it yourself and do a better job of it. Also - you could be passing up on the carry in the market - which you can get if you're doing the hedging.

A rough calculation tells me that you could be giving up close to $1.00/bu - depending on the length of the contract. If this type of contract is popular, I've got to get out and start doing some risk management courses again!

[blackpowder]

Guessing pooling minuscule.

Plus, I have to wait until I'm 75 until I can cash in those G3 "shares" lol.
Just another paragraph in the history of our grain trade. Which no one read.

[jdepape]

Richardson doesn't offer price pooling or averaging.

[sumdumguy]

JDP, ty for coming by. Your expertise is appreciated.