cancel
Showing results for 
Search instead for 
Did you mean: 
Senior Contributor

Re: TID BITS

Being that I sometimes have more of a stake in the commodity business than you do, its wrong for you to think that I don't know what I am talking about. I don't know how to farm but I do know how to manage finances and read what the corn market is telling me. I do not force you or anyone else to read what I write, and I don't care if you do or don't.

 

I don't live in a city and I am not an idiot, but I do know that what is commonly done in the small farming sector of the commodity markets with respect to maximizing your profits and reducing your costs is sorely lacking. Your intransigence in the face of the evidence that the marketplace has supplied recently and longer term is proof positive of that. I don't care if you make a profit or not, I'm not in business to make money for you but rather to pay my own bills. Actually your bad decisions in the financial side of your business usually provide my profits. 

 

And I will bet that when I happen to be long the corn market because the evidence says that's the right trade, you will be singing my praises. Which just goes to show who is honest and who is not in this conversation. 

 

Do me a favor and do the opposite from what I say, so that in short order we won't have to hear from you again because you will manage to crash and burn like so many other small farmers who didn't listen to good advice when they should have.

0 Kudos
Veteran Advisor

Re: TID BITS

One of the first things I learned when I became a trader is not to think that I knew everything and that everyone else didn’t.

Trading and life taught me to be humble.
0 Kudos
Veteran Advisor

Re: TID BITS

Shut  those  11,000  off  -  &  ce  what  happens  &  Lake  Mead   withering  will  accelerate  considerably  due  to  water  supplying  cool  towers  being  a critically  short  supply  for  coal  fired  generation  -   -   -

 

Public  Power  is  chastised ,  UNTILL   the  privatization  arrives  -   -   -

 

As  far  as  KW  $  rate's  structure    -  steadily  increases  being  on  the  horizon -  what  ever  the  source  -  -   -             

 

  

0 Kudos
Honored Advisor

Re: TID BITS

Local e plant put out a quick ship bid out today.

Bean plant removed 10¢ of their basis today

 

Combines are not running.

 

Water standing on the side hills, it is wet.

0 Kudos
Senior Contributor

Re: TID BITS

The first thing I learned as a trader is never to listen to other traders. They're always talking their book rather than what the market is saying.

0 Kudos
Senior Contributor

Re: TID BITS

Good, because in your honor I bought some beans today against a sale of corn, as I talked about last night. Let me know when the floods subside and Moses comes rushing through the river.

0 Kudos
Senior Contributor

Re: TID BITS

All I can say is wow these are the people I get up and produce food for and all they can do is complain and tell me us how to run our business with there mouths full. Go to the corner c store and get your food in a plastic container you have no clue

0 Kudos
Senior Contributor

Re: TID BITS

Actually I am trying to help you stay in business so you can keep growing food. You are in a huge downward revenue spiral in most agricultural commodities. You have a band of very well capitalized farm companies that are like vultures waiting to grab up your land. Your costs stay the same or rise, your profits sink. Your plan of action for when prices fall is to wait till they fall further. One bad year and another large segment of the small farming business goes bankrupt.

 

I am not complaining about how you do you business. I am offering suggestions about how you might be able to keep your business when prices drop another thirty something percent when the recession hits. And a;; you do is attack the messenger instead of learn from history.

 

If you don't like what I write, don't read it. If you want to stay in business, try using some of the suggestions.

0 Kudos
Senior Contributor

Re: TID BITS

kinda reminds me of 2008 broker calls says you gotta sell wheat 6.50 a bushel well I remember how that turned out. broke one of my neighbors. been a gbs guy since and dribbling a % out every now and then seems to work well not a margin call since and  don't have to support someone else. only if we would have got the disk out this year would have been in the drivers seat.

0 Kudos
Senior Contributor

Re: TID BITS

Pardon the pun, but when it comes to advisers and brokers you have to separate the wheat from the chaff, so to say. There are some very good ones who produce consistently superb results. Better yet, open a trading account online with some company like TD Ameritrade. Your futures trades cost you $5 per round trip (buy and sell combined). Then pay a few hundred a year to a good advisory service with a proven consistent track record that simply gives you ideas but does not execute.

 

When they tell you to sell the products you grow, you do the trade yourself in your own account. Buy in the hedge when they tell you to buy and wait for the next sell signal. And while your waiting you'll know not to sell anything in the cash market or through consignment to a co-op. You can easily increase your profits by 5-10% per year by hedging just a portion of your expected production. And every once in a while you will catch a lottery ticket where your hedge makes you a half a dollar or more a bushel, like in May of this year. 

 

In terms of actual dollars and cents, say you grow corn on 500 acres, and your yield is consistently at 125 bushels per acre - I'm deliberately using a conservatively low number. So you have production of 62,500 bushels per year. That comes out to about 12 corn future contracts. Hedge a quarter of that, three contracts, and earn half a dollar a year on your hedge. You earn $150 per cent for every cent that the market moves in your favor, which comes out to $750 per year profit just on the hedge. Add on to that the profits you made by selling into the cash market at better price levels than you ordinarily might have without the advice, and you probably wind up with a total benefit of about $20-$25,000 per year. That comes out to a cost reduction for your business of between $40 and $50 an acre per year. 

 

Now if your cost to grow those 125 bushels is anything like the fellows who post in this forum say their costs are, let's say $3 per bushel, and you save 50 cents per bushel with the hedging program, you book a return of over 13% per year (profit of 50 cents a bushel divided by cost of $3 per bushel) from that advisory service. Your commission cost was minimal since you only bought and sold 3 futures contracts, and the cost of the adviser was likely about a penny per bushel for all 62.500 bushels you grow on your corn farm.               

 

Even if you don't hedge, just by listening to the advice of a proven and successful adviser saves you from selling at times which are not as opportune as others, and in the example above would have generated about $15,000 in increased profitability !

 

Which is why once you spend some time researching the matter rather than simply relying on the anecdote of one guy ten years ago, you find out how much money you lost by listening solely to that story for ten years instead of making consistently significant profit by listening to a proven expert.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

0 Kudos