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03-13-2019 10:43 AM - edited 03-13-2019 10:45 AM
Me -- only if it would be a beneficial part of a tax-management strategy. Don't really have a good reason to do so right now -- prepaid seed, fertilizer, etc., operating loan balance -0-. Depends also on who's paying the storage costs, and the cash price outlook for unpriced inventory. And, again, it is only a "fail-safe" if it is a non-recourse loan.
03-13-2019 10:53 AM
great points wcmo....we get in to the tall grass pretty quickly on this stuff.
Plus, if you have already given your lender a UCC on the crop they will
be very unwilling to let it go I suspect.
Ultimately, that is the real problem with gov programs, you have to have
rules and then you have to have lots of rules and then you income test
the rules and then you payment cap the rules and then you get in to
paperwork, measurement issues, and then you need more rules, and
ultimately we all just get rolled up in the tall grass :-)
03-13-2019 04:14 PM - edited 03-13-2019 04:18 PM
From the land of milk and honey
Corn. oc. 3.17
Milo. oc. 2.97
Beans. oc. 7.71
Wheat. oc. 4.12
03-13-2019 04:47 PM - edited 03-13-2019 06:39 PM
Alot of if's, and's and but's here.
I take it the corn is in the bin (yours or coops)
And it is the standard loan (9 months)
Do you have to pre-pay storage ?
Depends on location...
One fellow has a 3.72 bid...sell, buy calls,
Since your biggest worry is price going up.
True, a problem, price will go up, and basis
Will get better.
With corn, not usually wide basis due to all
The moonshine still around, thus "market
Price" is the factor...much easier to
Protect in this situation via options,
Unless you have testicles the size of watermelons
Which then you could use futures.
While not paying a time premium, the futures
Allow for a more 1:1 price movement.
But for most producers, who have many
Things to do...options, in my opinion,
Would be safer...would not require
As much monitoring
What about those with lower price. Maybe
A bit different, if loan, have cash flow and
A "put"....as the market rises (need to be
Optimistic now days)...your sale price will
Go up...so you would gain any price appreciation.
That's at least the way I see it right now.
As your momma used to holler at you
DO YOUR HOMEWORK !!!
03-13-2019 07:20 PM
The light bulb just came on.....
this is a huge subsidy to the north and west with little to no
benefit to the east and south.....it should really be driven
by local cash value IF your point is to stabilize a wimpy banker.
Like I said...we all get rolled up in the weeds....and it seems
like Robbieekeyy is going to get to smoke the real stuff
while we out east get to smoke the rope.....
03-14-2019 06:53 AM
Coops should offer storage rates for grain loans at a large discount. They would know exactly how long they would be tied up in the loan. Plus, they could increase their business. Also, the Coops were organized for their service to their customers. That aspect of many of these Coops has totally disappeared.
03-14-2019 01:25 PM - edited 03-14-2019 01:26 PM
Not sure about the east west stuff except I do see the haves and have nots in the area of grain eating markets.... (the basis have and have nots)
It can be a tool to delay sales until the eastern markets chew through the easy pickens and will pay a little freight for the fringe grain.
But those who are self financing could sure take $3.50 cash on the stored bushels for a 1% interest fee and leave their funds in better yielding investments, while they wait for the expected basis improvement --- or guaranteed basis improvements in the hedged positions 5 months out.
I think that might make more sense when we find the 10% interest level. And it works better when your borrowing +80% value at 1%fees and making 3 to 6% on a little railroad company stock.
The world will collapse from environmental rot in 12 years --- keep that in mind. We must have a plan to take advantage of that reality like we did for Y2K, quatrain, that 20 ft rise in sea levels the UN predicted in 1980, and silent spring. The opportunities to see political waves and ride them for a little fun is always there.
Human nature never changes, does it? So buy up those old row markers for sale to the dooms dayers at the peak of an election cycle.