grain question
3 responses | 0 likes
Started by bear - March 26, 2022, 2:15 p.m.

since 1/3 of the worlds wheat comes from ukraine or russia,  how many of you farmers here might hold out and wait for higher prices before you sell your crop?   does this even influence your decision on when to sell?  do you have a target in mind?  

By baker - March 26, 2022, 7:20 p.m.
Like Reply

I use charts to follow and trade stocks and commodities so the news makes no difference as far as me buying or selling.  I would think or at least hope, most do the same.  And not really any targets, but I contract grains in fourths.

By metmike - March 26, 2022, 8:39 p.m.
Like Reply

Sounds like a smart way to do business baker.

Commodity/Futures markets were created so that people in the business (producers/commercials) could lock in favorable prices for their business well ahead of time.

Farmers are almost always bullish the grains when prices are going up, often too bullish.

With that being the case, they sometimes wait too long to lock in wonderful prices. Then when the price has topped and is on the way down, they don't want to sell because the price seems too cheap compared to where we just came the price continues to fall and then, many months later they have most of their crop unsold and prices are crappy.

However, we are living in unprecedented times. Many of us have heard that before but these are REALLY, REALLY unprecedented times.

The good part of that is prices in this environment are very unlikely to crash lower with producers left with a ton of unsold old crop and unhedged new least during the next several months it appears.

Each operation is a bit different and I realize that input costs have also gone way up too, especially fertilizer(if you can get it) and fuel costs.

Each farmer should be able to calculate the price he can sell at to make a profit. 

Selling in quarters like baker does is a smart move if you are selling on the way up.

Maybe he does something like this.

At XX price for corn, wheat and beans he can make a profit. 

Start selling above that price in increments. If the price goes up another $2/bushel, don't kick yourself for selling too early.......sell more at that price. If it keeps going higher.......sell more. 

Obviously you're taking a risk by locking in the sales of too many bushels of new crop  because an extreme drought, though very rare,  might reduce your crop size to something less than you sold on contract.

My farmer buddies here have often joked that they want a drought every Iowa (-:

Anyways, everybody has different situations but I have to wonder why guys would be holding on to huge amounts of old crop at these prices. Considering how much it cost you to grow that crop, $17 beans, $7.5 corn and $11 wheat is a record profit in most cases.

Continuing to hold on is ok but you're fooling yourself if you think that  it's not playing the speculator by doing that.

You're risking money to make more money, which is what speculators do.

Locking in very favorable prices to run a business is what producers/commercials use commodities/futures for.


By baker - March 27, 2022, 10:17 a.m.
Like Reply

Yep, we did like most that I know.  Was around 3/4 sold by early march on the cash wheat.  But still trading the ags to add to it.