Yes i remember him. Made for some interesting reading from a distance. It's been several years. I thought someone said he died of cancer? Do you supposed he got reincarnated as rayfcom? Or maybe rayfcom is the "ghost of farming past" (my apologies to charles dickens)
If I recall correctly, ICF wasn`t a previous farm kid or an active farmer, he had his land custom farmed for $150/acre. But he had a fascinating story of in the 80`s when land was going for $800/acre, he bought like crazy, sometimes making the payments with his credit card.
I love stories like that, there are a few around here that I`ve said "if they ever write a book I`d buy their first copy!". One guy, I graduated with him actually, he trades farms like the rest of us trade cars and his nickname is "Balls", Balls isn`t broke yet 🙂
Please show me where I insulted anyone except when they insulted and offended me first.
I'm from New York, I speak civilly to everyone unless you are disrespectful to me, and then I'll respond and kick your butt.
Other than that I really am a nice guy.
Ray, I think what started the feud is when you suggested selling below cost of production. I`m sure that could be "good advice" if you know what you`re doing because if your COP is $3.75 and you sell for $3 and corn goes to $2, true you`ll "lose less" but no farmer wants to hear that. The heck of it is, if you lock in $3 and then "Superman shows up" and corn goes to $4.25 then you`re SOL. Oh I know "Buy calls to protect yourself" well that involves devoting 3 hours a day to watching the markets and "writing checks" for options. Most of us don`t like writing checks for things we don`t completely understand and that ain`t bad, because that`s how many of us have been doing this 20, 30 40, 50 years now.
First of all, I never said to hedge all of your production. If my memory serves correctly, I said when you start hedging, you only hedge 15 to 20% of the production, so if the market continues to rise before the near trend re-asserts, you have a lot of room to take advantage of that rise by continuing to hedge at higher prices. And remember, I only recommend hedging in bear trends, you do nothing in bull trends. And is a bear trend turns bullish you take the hedges off. Most likely you will take them off at a profit from where you sold them, but even if at a loss, with the trend then favorable the loss on the hedge will be more than compensated by the overall profits you will turn as prices move higher in a bull market.
The market really should no the below the cost of your production when you start hedging a season's crop. And btw, I would never hedge more than one season at a time. The reason I say the price should not be below the cost of your production is that when the season started, if the cost of production already was higher than the market price, why did you decide to grow that crop to begin with ? Okay, let's say that you were hoping that the prices would rise over the course of the season...in that case you should have started hedging on day one of the season, so that at least some of the loss that was locked in when you purchased your supplies would not get worse if prices kept falling. If you were correct and prices did rise through the season, then you average those original hedges with higher priced hedges as the market rises. The idea is that the overall bearish trend will re-assert itself at some point in the season, and by harvest you will have averaged your hedges at higher prices than where the market eventually winds up.
Additionally, you are not married to your hedges. Take the current situation, we are in a bearish market, but during the last several weeks we have had a price bounce to $3.70. Even in your cost of production is above there, its still not a bad idea in a bear market after a good sized bounce to hedge a portion of your expected production, Because then, when the bear trend re-asserts, the price will fall back down, and if there are signs the market is then bottoming you take the hedges off for a profit that then lowers your cost of production and reduces your losses if prices don't bounce back up. If they do bounce back up, you have taken off your hedges and profit from the ensuing price increase.,
I guess there may be a misunderstanding in the techniques that I advocate, To me, hedging strategies are dynamic, you don't just put them on and leave them. That's why the good advisers are worth the money you pay them, because they are watching the market every moment of every day and giving instructions several times a year based on what the market is telling them. You very easily can be in and out of hedges two times in a season, and still wind up selling into the cash market. That's the beauty of a good hedging program, it changes with the signals from the market so that it becomes a new revenue stream for you.
Ray, I think the problem was you didn`t realize the high, out of whack our cost of production is compared to the board of trade. That doesn`t mean the axman is around the corner, because we can donate our owned land and our labor and if the semi won`t start, we`ll pull gravity wagons out of the grove to "get by one more year" ...and we can, we have going on 3 years now of getting by. I can show you where some of us can "get by" if corn dropped to $1/bushel. But it shouldn`t be this way.
A friend contracted $9.50 beans beans were $10.40ish on the board just to give perspective of what happens to us after basis. Well, he should be happy right? The rest of us are looking at $7.50 cash beans. Well, his banker would tell you he needed $10 beans to breakeven and plus he was in this band of bad weather and had to replant and his beans aren`t completely ready for tomorrow morning`s predicted freeze. Well, he can go and buy some of our "$7.50 beans" to fill his contracts and pickup a couple bucks he wouldn`t ordinarily have, but he`s still sweating a little because he won`t be driving over the scale with his own beans during the period of his contract.