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Senior Advisor

Another advantage

of selling too soon. You got money in the bank account instead of having to borrow. Sometimes i can fill the bank account during the first week in January and don't need another deposit til the next january.

 

My bin stored spec account did not allow for that. That is what happens when we visuallize a commodity as a long term asset. Perpetually expecting higher prices is not a good strategy.  But then inertia rarely is.

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15 Replies
Senior Contributor

Re: Another advantage

Come on krafty there is no advantage at selling to soon even though we all do it some time or another. When interest rates are low as they are now the market doesn't have to rally very much to pay  the interest. and you don't get hardly any interest in your checking account on the money from your cash sales.

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Senior Contributor

Re: Another advantage

I have always found it easier to sell too early than to sell too late.  Personally, it is easier for me to sell into an uptrending market than it is to sell into a downtrending market.  2008 was a great example of this. 

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Senior Advisor

Re: Another advantage

What is the advantage in paying interest or storage in a declining market?

 

You're right that the bank doesn't pay interest but they don't charge storage either. Unlike the elevator that stores my grain..

 

We always make a mistake when we sell grain. WE either sell too much or not enough depending on following market action.

 

 

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Senior Contributor

Re: Another advantage

Krafty the answer to your question is there is no advantage to paying interest or storage, but that wasn't  in your statement. You stated advantages of selling to early which means tp me that prices rallied after you sold. Maybe you should have built a few more bins during your long farming career. so you wouldn't have to pay storage to the elevator.

Senior Advisor

Re: Another advantage

I have storage that is not in use. When you are located 500 miles from the bin site who is gonna check bins? 

 

Selling too early means that I am well aware that I won't sell iinto the absolute high and I don't know when the market will turn. But I do know I hate selling corn for $5.50 after I passed up $6.50 while waiting for $7.

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Senior Contributor

Re: Another advantage

But krafty if you sold it all  to early for 5.50 you can't get 6.50 for any of it that extra dollar would pay for alot of interest. I'm sure you know  someone relable who  would gladly check your bins for the right amount of cash.

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Senior Contributor

Re: Another advantage

Why don't you rent your bins out at 30 cents a bu, sell the grain off the combining, and pay your income tax on the grain sold. Don't worry about what you could have made speculating with grain in your bins. Like you say, a bird in the hand is better than ----. Besides, the gov will share in your losses from selling too cheap. PAY YOUR TAXES KRAFT-T, and don't whine about what could have been, when it can never be.

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Senior Contributor

Re: Pretty much a $9 corn, $300 cwt

feeder calves, $22+ bean, $200 - cwt tradit fat cattle upcoming prices believer here, thus just slowly meter cash sales out as things steadily, slowly tick towards the afore.

 

Since the afore is related to long term input costs:

the obvious seems how many if any inputs has one bought over the past 5 years that was cheaper, not steadily higher priced? 

 

Alot of cash liquidity globally:

USA added $1+ trillion to the global system over the past 2 years.

ECB added 1.3 trillion eu over the past 2 years also.

 

The simple afore is a pile of dough over the time of typical 7 turn ( trade, use ) currency trends.

Heck it equates to an extra $22 trillion in currency trades gdp upon a globe which used to run only 22 trillion total annual consistent gdp.

 

 

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Veteran Advisor

Re: Pretty much a $9 corn, $300 cwt

Mark I didn't thik that you believed in the trickle down theory?

 

Yes there is lots of liquidity, the problem is that the liquidity isn't in the hands of the folks that buy the oil,corn and fats. 

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