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tom s. in tn.
Frequent Contributor

Re: Whats going on?

Back in the old economy, you know, the one prior to the crash in 08'........ anyone here recall,,,,,,,, there was plenty to talk and speculate about....... Sen Grassly and the next farm program etc. I remember vividly the discussion of the looming mortgage storm being brought to light and was first educated about it right here in this forum back 05'. I couldn't comment, but learned a lot.

 

But what's there to log on and say today? Commodities are in the outer limits and everyone is amking $$$,$$$.00 hand over fist.

I wish I could find the forum where the old timers went, because I feel there is a Lehman moment shping up on the horizon, and I just hope everyone is around 4 or 5 years from now. (the censorship love me here)

 

P.S. maybe I can get something going; who's making $$ trading Texas Tea today ?

Tom S. in Tn.

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rayjenkins
Veteran Advisor

Re: Whats going on?

BA----I'm certainly not afraid to express my opinion on futures to those on the phone, and can offerl options if they need to move corn but maintain a bullish futures bias......but the cheapest and most used---the basis contract--is also the least effective in the long run, because people just cannot pull the trigger and call it good.....basis contracts are a usually a good way to extract 10-15-25 cents, but whatever plan they had when entering the transaction gets overtaken by bullish enthusiasm when you make that call to them when corn is up 25 cents and you think they should be setting the futures side of the transaction......we are 100% ambivalent whether they do, or don't, so that phone call is based on providing good customer service, not locking in "cheap corn for Cargill"

 

Options are high priced, but most farmers would likely be better served spending 20-35 cents on a call option to create minimum price contracts than using basis contracts....have seen many, many, many folks end up pricing a basis contract at the bitter end after losing anywhere from 50 cents to $2-3+.......one of the least favorite items of a merchant's job is calling someone who has burned through the entire 30% of equity that was in there contract at the start, and has now disappeared, and they either need to price it out or send an equity check........

 

I've said it before, and I'll say it again......farmers don't need help being even more bullish....they need help making decisions on managing risk and selling....there are plenty of "enablers" out there in the grain industry who tell folks what they want to hear, not what they really need to hear....

 

Ray J

 

 

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hardnox604008
Advisor

Re: Whats going on?

Hi Ray,

 

A freind is a grain merchandiser, actually has moved up to corporate at one of the bigs.

 

In this part of the world crops usually look good- sometimes good, sometimes very. When you'd start going on about why you were feeling bullish he'd never take the bait one way or the other, would just look around and say, "boy, these crops look great, don't they?"

 

Smart guy, guess that's why hemoved up in the world.

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vrbuck
Advisor

Re: Whats going on?

You are one smart person Ray. It speaks about all the permanent bull attitudes seen in these chat rooms the last few years.
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BA Deere
Honored Advisor

Re: Whats going on?

Hey Ray, no doubt you want your customers to do well.  And someone on here needs to give the less than bullish side. The thing is the past 5 years or so one of the best market plans would be : do absolutely nothing and sell it all hot off the combine.  In the past everyone has said "you won`t go broke making a profit",  Mark Gold once said `things are different now...if a farmer sells $9 beans making a profit , but the neighbor sells his for $13..guess who will rent the farm next door?`.  I have a very good friend that gets all "beared-up" too early and forward sells and gets burned every year, options would be an excellent choice for him.  At any rate keep up the good work Ray,  I like my pizza with pineapple and saurkraut (sweet n sour) M.Tiger is the pineapple and you`re the saurkraut, it all balances out Smiley Happy

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Silverwheaton
Senior Contributor

Re: Whats going on?

Many times in the past few years it paid to be bullish!! Daaa!

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Jim Meade / Iowa City
Senior Advisor

Re: Whats going on?

Being a permabull or permabear is about like standing looking in one direction.  Sometimes the wind is in your face and sometimes in your back.  If one direction is better than the other and you pick it, you're good.  If not, you're bad.  If they are equally likely, you're just fooling yourself and will make bad decision sometimes.

I said I don't have much to offer the board and I believe that.  i'll say what I am doing now.  I'm not defending it.  On old crop I look at the basis and the carry.  If the basis is wide and carry is wide, I tend to hold on to it.  Lock the bin.  If the bais is tight or favorable and their is no carry, I'm more inclinded to sell from right now out to a month or two months.

On new crop, If cash prices are historically very strong, I will price a little, maybe 20%.  This is especially true if I need bin space.  I'm not in a position to deliver off the combine - I'd rather bin it so that influences my sales.

I've seen some very good farmers get burned bad by forward selling over the last 5-6 years.  I dont' know whether it's worse to deliver $4 corn to a $6 market or pass up $6 corn and sell it for $4.  Maybe it makes no difference.  But, in the first case you might have 3 years to thnk about your marketing plans and in the last case you have maybe 6-12 months.  For whatever that is worth, which is nothing. 

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steeringwheelholder
Senior Contributor

Re: Whats going on?

Conversation gets stifled because of fear of ridicule by some folks who know it all. I think a lot of posters alternate between here and the coffee shop, and aren't out doing it with some of the rest of us.
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iowastateisgreat
Contributor

Re: Whats going on?

Some of still come here everyday to read Maketeye.

 

I don't have time for all the whizzing contests (bulls vs. bears). It is hard for me to understand why anyone wants to listen to a permabull/permabear talk their position: always searching for reasons to support their outlook. I simply view my role as risk manager and try to keep my perspective at a higher level. If anyone could really predict the prices or yields, they wouldn't waste their time on a chat board. Frankly, that's why I don't bother posting. If you post something bullish or bearish someone gets their nose bent out of shape defending their position. I try to keep the emotions out of my decision making so getting entangled in a bull vs, bear discussion just clouds my thinking.

 

As the chief risk manager on my farm, I am more focused on the USD, interest rates, land acquisition, tax implications, crop ins. etc. The big picture is long-term survival realizing that farm size is growing at a rapid rate and how to adopt technology that enhances ROE. The daily market gyrations can distract a guy from focusing on the most important decisions.

sw363535
Honored Advisor

Re: Whats going on?

Thanks Iowa st.,

I for one would like to here more from you.  That was well said and I agree.

You have the perspective I would like to here more often.  After all it does say "Successful Farming"  somewhere on the header.

 

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