"Contract squeeze worries farmers " is the WP headline

[bigzee]

Had an interesting talk with my ag rep. Known the guy for 15yrs. I asked him if farmers are going to double down for 22.

He said not likely. Says industry realignment probably coming. Too many guys over their skis.

I was surprised. We have had weather issues before. Maybe the forward contracts were the final straw and guys will check their risk profile now.

Also said non traditional canola areas will give up on the crop now that they have seen zero.

If your last comment stays correct (which I believe it is ) we are headed back to $6 durum, and 18-20 cent lentils. Let the good times roll.

Maybe it’s time to exit the program, get to the lake and quit with all this nonsense.

[bigzee]

If there’s one thing I did right this yr was no canola.

[the big wheel]

East to fix all these *** contracts should be act of god to
Weather to begin with. Al the risk is on us all the time
No matter which stage growing to storing to selling.
What’s the down side? The buyer doesn’t get what you contracted
So what they just pay what the market is then and
Pass it on to consumers. Isnt that who should bare the risk?
If it’s too high then don’t. Buy it.

[Blaithin]

True enough, those are elements out of all our control, but the forward contracting is something we do have a choice in. I got dozens of those text blasts this spring for locking in fall production. I ignored them all. I would never sign a forward contract before Aug 1.

Maybe predatory marketing should be investigated as well. The AOG clause is obviously useless and these grain companies were more aggressive this year than usual. Farmers with FOMO were a soft target perhaps.

And we have another problem. The signalls in the market are out there now. Canada is short canola and wheat, some other country or countries will step into the fray now in the offseason. $20 canola might be a distant memory soon as Errol points out.

Many didn’t think $20 would be around long before. Was a bad conglomerate of factors.

Those guys stuck delivering $10-$12 canola when it was spotting for $23, who can blame them for wanting to try and lock some in for new crop.

Hindsight is 20/20 but it was hard not to book something at least. The idea it could have got so bad so fast was pretty minimal even after poor snowpack.

[Blaithin]

East to fix all these *** contracts should be act of god to
Weather to begin with. Al the risk is on us all the time
No matter which stage growing to storing to selling.
What’s the down side? The buyer doesn’t get what you contracted
So what they just pay what the market is then and
Pass it on to consumers. Isnt that who should bare the risk?
If it’s too high then don’t. Buy it.

Isn’t part of the issue that farmers are currently on the hook for what the buyers sold it for?

Sales isn’t my department but the impression I got was if someone has $11 canola contracted, they’re being told they have to pay like it’s a $20 contract to buy out because that’s what the company sold it for. But I could be understanding it wrong, I’d need it written down for me to really absorb 😂

[farmboy44]

Isn’t part of the issue that farmers are currently on the hook for what the buyers sold it for?

Sales isn’t my department but the impression I got was if someone has $11 canola contracted, they’re being told they have to pay like it’s a $20 contract to buy out because that’s what the company sold it for. But I could be understanding it wrong, I’d need it written down for me to really absorb 😂

When they buy grain they sell futures. It would be hedged (sold) on the ice futures at $11. When the contract is cancelled they would need to buy back the futures at $20 since they aren’t receiving the grain to offset the position they sold. They would be out $9/bu on that transaction, real cost.

[Partners]

Their line is if you don't contract you can't deliver?
Cuz boat is coming..if it's full tuff for you.
Sales pitch, like a machinery dealer or car salesman.etc...

[Blaithin]

When they buy grain they sell futures. It would be hedged (sold) on the ice futures at $11. When the contract is cancelled they would need to buy back the futures at $20 since they aren’t receiving the grain to offset the position they sold. They would be out $9/bu on that transaction, real cost.

Ok, so I’m not totally misunderstanding it’s just not clear as glass in my mind and I don’t speak the lingo.

But shouldn’t the buyers be on the hook for the $9, they’re the ones that sold the futures. The farmer sold for $11, the GrainsCo decided to sell on the futures and that’s screwing them now.

Do they HAVE to sell on the futures or they choose to because that’s how they can make like bandits a lot for the time?

Goes back to farmers footing all the risk, doesn’t it.

[farmboy44]

Their line is if you don't contract you can't deliver?
Cuz boat is coming..if it's full tuff for you.
Sales pitch, like a machinery dealer or car salesman.etc...

It sounds like there are times in which more people want to deliver than there is space for

You realize the commodity pipeline runs 12 months per year, not just 12 weeks?

Not everyone can move everything all at once, hence why those who are willing to commit to supplying seed in prime windows are given the opportunity to utilize them

The lack of accountability here is amazing. The companies are the ones who are the bad guys because they want to fufill the deal both parties agree to.

Not surprised coming from you, partners should get to haul whenever he wants and get the best price regardless of how many others are willing to haul for cheaper at the same time.

just know your in the minority.The silent majority of us don’t want to see the rest of us fund some bailout for others unfavorable decisions.

[the big wheel]

You’re talking about staying within the current parameters of
The system we have.
It really doesn’t sound too good when the grain co is stuck with
9 buck loss does it? So why is it acceptable for the farmer to
Bare that risk? We’re richer or what? One of the problems
Is this fake pricing in the fall. Never more evident than
Last year prices were based on a fake production number
That who was promoting? Grain companies were. I’d like to see rhe
Books on who bought what at 11 bucks and got sold at 20?

[farmboy44]

Ok, so I’m not totally misunderstanding it’s just not clear as glass in my mind and I don’t speak the lingo.

But shouldn’t the buyers be on the hook for the $9, they’re the ones that sold the futures. The farmer sold for $11, the GrainsCo decided to sell on the futures and that’s screwing them now.

Do they HAVE to sell on the futures or they choose to because that’s how they can make like bandits a lot for the time?

Goes back to farmers footing all the risk, doesn’t it.

They don’t have to hedge the futures.. several commodities (durum, flax, peas, lentils) have no futures component.

However the farmer didnt deliver the grain, therefore they are in breach of the contract. Companies also make sales based on the cost basis of their ownership. Do they get to just tell their buyer next year?

Do you really think you should be allowed to just contract at 11, not deliver, and sell it across the street for 20 bucks?

[Blaithin]

They don’t have to hedge the futures.. several commodities (durum, flax, peas, lentils) have no futures component.

However the farmer didnt deliver the grain, therefore they are in breach of the contract. Companies also make sales based on the cost basis of their ownership. Do they get to just tell their buyer next year?

Do you really think you should be allowed to just contract at 11, not deliver, and sell it across the street for 20 bucks?

No, be on the hook for $11, buy out the $11 if you don’t deliver. Why do you have to buy out for the company too? It’s a risk for the farmer to forward sell which means it’s a risk for the company to forward sell. Why don’t they foot that risk like the farmer does?

[farmboy44]

You’re talking about staying within the current parameters of
The system we have.
It really doesn’t sound too good when the grain co is stuck with
9 buck loss does it? So why is it acceptable for the farmer to
Bare that risk? We’re richer or what? One of the problems
Is this fake pricing in the fall. Never more evident than
Last year prices were based on a fake production number
That who was promoting? Grain companies were. I’d like to see rhe
Books on who bought what at 11 bucks and got sold at 20?

Which party is nullifying the contract? If you cancel your mortgage does the bank pay you a penalty? If the land market crashes should the bank reimburse you for lost unrealized gains?


And we wonder why city folk perceive us as complainers

[farmboy44]

No, be on the hook for $11, buy out the $11 if you don’t deliver. Why do you have to buy out for the company too? It’s a risk for the farmer to forward sell which means it’s a risk for the company to forward sell. Why don’t they foot that risk like the farmer does?

Because since you breached your contract the company now has to pay 20 dollars to replace the tonnes they bought from you at 11

[Blaithin]

Because since you breached your contract the company now has to pay 20 dollars to replace the tonnes they bought from you at 11

Is it in the contract that you have to buy back what they sell if you breach?