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elcheapo
Senior Advisor

Protection

Well maybe I selected the wrong word.

No this isnt a post about guns...

But if Vlad does not cool off...it might be a valid topic.

No, not like in our younger years, at certain times, there would be intense discussions, if we had protection.

 

Protection is defined as ""the action of protecting, or the state of being protected""

Ive got the tv on in the background, saying gas has went up 35 to 50 cents a gallon overnight in wichita.

So looking at all this stuff, reading, news, etc, im starting to rub my bald head.

Protection....the state of being protected...so what does that boil down to, in my opinion..

So what are we protecting...ourselves...our way of life, our family, our business.

I am thinking, how can we protect all the above ?  My concern is this .  We see things go up and up...but in the past ive seen this before...about the only way to protect expenses is buy before it goes higher....or shop like a soccer mom from new jersey to get the best price, who cares about local.

On the other side, protection of income...yes, there is crop insurance...where yeild and price can be covered to some extent...in corn country ok, but as sw has pointed out, out here in the plains, the yield part is low, plus only coverage is 80 to 85 percent ...it covers the cost to plant....but what do WE live on ???

If you think about it, you should talk to your supplier, and have them pay your insurance premium...after all that is who is really being protected !!!

Now the hard one...price...

In an environmet where you dont have people on the floor, now only a room with a bunch of monitors, and no noise...where most is based on the algorythem...(sorry i am not spelling well today)....

We can make or loose a profit in one day....expaned trading limits...those work both ways.

So how can we protect ourselves...

Local pre sales...ok, cheapest way, but at mercy of the ugly basis monster....you must deliver (unless act of god)...and no upside protection...the question is, will the price locked in cover future costs, which keep going up.

Then you could get into the market..options are the least risk, but high premium cost...and again, the basis issue, if you locked in a high enough strike price....but you have protection from prices falling, and if markets go up, you get the higher price....but you lost premium value...

Or get a contract itself.....you get cent for cent market movement...

Somewhat cheaper to get in....but then a friend called "margin call"

The last is no protection at all...

In this instance....interesting things can happen...and failure to have protection can change your lifestyle.

So....what is the answer...

Protection....how things have changed from years ago...

Today you need to stop at the broker, insurance office, elevator, fert and chem dealer, seed dealer, bank....

Life was so much simple years ago...we only needed to make one stop, the pharmacy...to be protected.

 

 

 

 

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8 Replies
Hobbyfarmer
Honored Advisor

Re: Protection

filled semi Tues evening.

Wed noon 8 cents higher

Wed evening another 10 cents higher.

Same station.

The pilot and Flying J were in $4.40 territory other side of Des Moines.

Two 130 mi round trips later and probably should have topped off yesterday evening @ $3.89.

Stupid me I sold load of corn this morning @$7.32 .

Looked and it is $7.40 now with 8 cents worse basis.

Still have two bins of the stuff that haven't been cored yet

Got a text, one pit , long lines, nothing over 15.5% .

Let's me stay home... Oh Joy.

Neighbor and I are cutting home grown fence posts instead of hauling today.

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Hobbyfarmer
Honored Advisor

Re: Protection

Bean price falling out of bed this noon.

ADM moved from May to July and increased basis.

Double whammy.

30cent hit total.

Edit...

E plant just went to minus 30 cent basis was -20

I just can't catch a break...

Suppose I can claim these reductions as a "loss" on this years tax return?

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k-289
Senior Advisor

Re: Protection

The  money  changers  at  the  temple ,  history  repeats  itself   -  -  - 

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sdholloway56
Senior Advisor

Re: Protection

While I wouldn't bet the over on this, given Russia's disastrous campaign thus far, it is always a possibility that peace might break out sooner than later.

I think some form of cheap "worst case" (sorry) protection is warranted.

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rickgthf
Senior Advisor

Re: Maybe you need to be more proactive.

  For the past two years, up until a couple of months ago, traffic on the state road in front of my house has been quite modest with many people working from home, half my neighbors did, it seemed anyways.  But through the fall and particularly the past couple of months, every morning and every afternoon there's a lot more traffic with people going to & from work,  just like the old days.

  But now with $4 gasoline don't you think people might just stop complaining and do what they were all doing just a few short months ago.  How hard would that be?  The fastest way to bring down the price of fuel is to, just not use it, and save yourself a bunch of money, too.

  Meanwhile, here there are a huge bunch of people using fuel oil for heat, despite the fact that we live in the middle of one of the largest hardwood forests in the world,  virtually surrounded by wood fuel wherever you look.

  As usual, I've been spending some time cutting next year's firewood, mostly white Ash @ 24.2 million BTUs per cord (3400 lbs seasoned) equivalent to 174 gallons of fuel oil, at $4 per gallon that's worth $700 per cord for 3 hours work.  You can buy it all day long, cut, split, & deliver for $200.

  Four years ago, when tractor fuel was $1.50 per gallon, I wondered if making biodiesel still made sense.  This past Sept. when I made my fuel for this coming year it cost me $0.60/ gal for materials, it made more sense.  Today, it looks positively genius.  At the very least, I won't be using Russian crude.

  And then there's the real kicker, it costs me 1.25 cents per mile to drive our plugin hybrid on electricity, same vehicle, 11.5 cents per mile on gasoline.

   Maybe, instead of bitching about it all the time, in the words of Shakespeare, " to take up arms against a sea of troubles And by opposing, end them".

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elcheapo
Senior Advisor

Re: Maybe you need to be more proactive.

rick....thank you for your post, it was a breath of fresh air.

You prove there is a different way to think, and its functional.

Couple of questions.  First, how do you use wood to heat...water boiler, outside air furnace...?

Biodiesl...what oil do you use for base stock ?  With the oil seed crops going up in price, how has that impacted the fuel price.

Nice to hear elec vehicle being used, the only downside is the lenth of trips...does your vehicle have a built in "regenerator" to help keep the battery up.

What would really knock peoples socks off....if you used wind or solar to charge the car.

Curious...how does the charging work?  220?? Quite a few amps ?

Keep up the good work...more people like you, we wouldnt need the russian oil !!!

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rickgthf
Senior Advisor

Re: That regeneration feature is amazing.

  All the electric vehicles I'm familiar with use regeneration, the drive motors automatically turn into generators to charge the battery on deceleration & stopping. When you press the brakes, they don't actually stop & hold the vehicle until it's almost stopped unless you do a panic stop.  To give you an example of how efficient it is, one of my farms is located 1.9 mi. from the home farm up a 500ft rise in elevation.  If I drive directly there the data panel indicated I've used 1.4 kWh of energy. When I return the same 1.9 mi route, it indicates the round trip energy used is 0.9 kWh, 0.5 kWh less than one way.  I have effectively driven 3.8 mi using 0.9 kWh, almost exactly my 4.1 mi per kWh average mileage.  In other words, hills don't cost you anything. 

  Oh, by the way, that 3.8 mi trip cost me a little over a penny,  using the average subcompact car available today at 24 mpg would have cost 64 cents @ $4 per gallon.

  And it's not that I'm philosophically opposed to using any fossil fuels, I just don't see the need to use more than is necessary.

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sdholloway56
Senior Advisor

Re: That regeneration feature is amazing.

Russian crude imports hit about 2% of our total crude usage during the Trump years, up from .3% under Obama.

A non-thing. It is a global market of a fungible commodity.

But yes, why not use less and leave the rest for people who are hard wired into situations they can't immediately change?

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