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Frequent Contributor

Re: Basis: A license to STEAL !!

The problem is that you choose to haul to an elevator and put grain on open storage instead of  taking charge of your own destiny and build grain storage on your own farm. 

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Senior Reader

Re: Basis: A license to STEAL !!

Reno   I understand your thought in theory but in reality it makes little sense to me. They were still needing the grain as the ethanol plant grinds 60,000 to 70,000 bushels a day. They were not full, When they get full they shut us off early in the day.But the next day you deliver again. When the elevator in town is full they are full until they load a train or trucks.(may be a week or two). When I deliver my corn to the ethanol plant, I pull onto the scale(owned by the ethanol plant but maintained by my elevator) An elevator employee probes and weighs my truck, I dump the load myself and sweep up my own mess. It goes onto a conveyor(owned by the ethanol plant but i'm guessing maintained by the elevator) then goes into a bin(owned by the ethanol plant but i'm hoping they share maintenance on). The elevator owns the grain in the bin until it leaves the bin.(which is daily).They actually never handle the grain. It's not the same as when I dump at the elevator in town. They dump my load for me, clean up any mess. They usually have to hold that grain for some time(storage) and also have to load it onto a train then pay the rail for shipping.(The storage and shipping I already covered for them with the basis discount)  I was told many years ago that basis was to cover the cost of handling the grain.But the rest of the expenses the elevator had was to be made up in "their" marketing of "their" grain. After all that's what I am expected to do if I want to stay profitable.  It's looking more and more to me that the farmer is expected to pay all the expenses incurred in running a grain buying facility. Way too often lately when there is a small rally in the grains it seems to get covered partially by a basis move.    

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Senior Advisor

Re: Basis: A license to STEAL !!

Not really, at harvest, filled bins on farm, rent some addtional space a few miles away, and hauled in to elevator only cash contract grain and 'excess'.  The elevator physical cost when I unload is the same, whether it is cash, contract or storage, it all gets unloaded the same, handled the same, goes to the same place.  Only difference would be how they cover their purchases with hedges, which would be the same at any point in time for their new purchases, whether from their storage or hauled in from farm.  Any pricing differences at the elevator are solely due to their efforts to attract new bushels, gain market share.