Floor Talk March 1

[elcheapo]

soybean crushing plant

old 996

new 987

local coop

9.17 old      (79 cents difference)

9.27 new     (60 cents difference)

mapquest say 95 to 105 miles from home to crusher.

trucks getting 3.50 to $4.00 a mile, so figures out 45 to 50 cents per bu for hauling

That was the close cusher....the one further away I was going to call, but too late, they are closed

other plant is 150 miles.

what's sad...you do all the work...bins, line up trucks, pay trucking, etc....etc.....yet only $200 a load additional profit....

you have to ask yourself....why kill myself for penny's......when everyone is making dollars

[Canuck_2]

Is storage charged by the month and all due the first day???

Here it is charged on a daily rate except for some like wheat where if you leave it in storage until Sept you pay for 2 months.

they don't want to have to move wheat around during soy and corn harvest, after that it goes back to a daily rate.

[elcheapo]

at least with our bunch, they charge you by the month.

[gurly3801539]

Our local coop quotes rates by the month but charges by the day.  It is usually deducted from the check when you sell.

[WCMO]

Just noticed that local elevator went back to 65 under this morning.

[sw363535]

I had two thoughts ................ it was heavy

1.  High speed world wide computer trading seems to enhance day trading....... rite or wong?

2  Volatility creates protection through basis ............. rite or wong?

[WCMO]

Likely 'yes' to both.

[elcheapo]

Expand #2

[ECIN]

Back a few blue moons ago - Around here - when the markets went up  - say like the limit - the local elevators would take protection - most time on the amount it went up and we could NOT sell at the higher price -  Now they just changed the name and call it basis - I agree with 76 - man what a racket ! 

[sw363535]

cheapo.

I think what we are seeing is an attempt to heal up from thr beating the elevators took the last three years.

That much volatility makes it very difficult to not get caught in the wrong position without protection for a while.

Even overnite can hurt and it takes a up and down market to average out on the gains and losses....

We took a nearly 2 year down market...... Elevators live on a seasonal reality.....

When you get lower going into harvest there is a supply reason as always and sellers at harvest take a bottom market....at least that is what we thought.....But for two years the seasonals did not stabilize the trend.  It went down more.  So elevators have to dig a deeper bottom so they can hope to create some margin to sell into....

I got too wordy............ cheapo.   Watch your coop... they can't have a board price guarantee to you and get it hedged without 15 to 30 minutes passing.  a phone call.  and eventually a fill.    if they turn back to you and say "we can't do that now its 5 cents down" ..not good..... the only answer is to widen the basis and write the check. Lowering the basis that is a mistake because not the end user can lower his bid and still get grain...more grain bypasses the elevator.

it is always good when grain goes down for the end user....

It is always good for the produer when it goes up.....  and the elevator because he is an extension of the producer....

The elevator can survive and average out when the price is steady and live off the margin even if it is too low for the producer.

Always down and the elevator cannot make its margin

When the price goes above break even by $2, producers won't complain for the first $2.50 of the slide down ....

Elevators struggle from the start. because they are always buying high and selling low.  And if there is quick volatility they can't avoid problem spots. 

 I'm thinking there was a lot of red ink the last two years...

Normal freight rates do not explain 60-80 cent basis differentials in 150 mile distances, but then the berkshire/hathaway profits might.