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Veteran Advisor

Re: did vr get outta his puts?????nt

Mt asked a simple question.  The rest of the posts are the rants.  MT and Vr are big boys, I don't think either one worries about this stuff personally.

 

Just to remind you, the horse race is still on.  Mt sold beans at 14.50 range and VR said they would go to 20.   Around the last curve and headed to home VR is pulling ahead.

 

Now in the corn derby, it looks like VR's horse has pulled up lame. 

 

Free entertainment. 

 

 

Senior Advisor

Re: did vr get outta his puts?????nt

When I make a sale, it is a done deal. A historical event which I erase from the hard drive instead of second guessing my decision. The focus then becomes the next sale. Perhaps that is what differentiates between a market and a speculator. I don't expect to top the market ever. So, I don't try to pursue that objective.

 

It seems to me that if retains ownership of a commodity when it is at astronomic levels, he really doesn't know what he wants. He just knows he wants more and will want more at any price level.

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Senior Advisor

Hahaha! ;)

Krafty, you post more about the market AFTER you make a sale! And you're thinking about your sale. Pulleeeze Smiley Wink

 

I DO try for the top! Maybe not for the whole ball of wax but I think it's a goal worth pursuing in order to learn the game and the patterns. I'm no more a spec than any producer out there. My history shows I'm not risking much. And I do capitalize on the run ups which are almost an every other year occurance. In that territory are the biggest returns to be had. Doesn't mean I can/will forecast events before they can be known but I know the trends.

 

You made a comment about the idea that I 'can afford it' at this point. Fact is, the only reason I can afford it is because I've done it. I rent my ground and yet I'm largely self financed, and have a crop in the bin most of the time ready to take advantage of the trends. I'm not trying to toot my horn. I'm trying to point out there aren't just a couple of ways to market. I did buy some puts @ 25 years ago.

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Senior Advisor

Re: Hahaha! ;)

What ever works for you.  How do you handle the tax angle with large sales one year and not the next?

 

Me I would rather invest in farm real estate rather than crop inventory

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Senior Advisor

Re: Hahaha! ;)

First, far West wheat country ground isn't anything like Midwest corn country for real estate. And wheat isn't corn and beans.

 

Right now opportunity cost is almost nothing for holding wheat in arid areas. Bins long ago paid for themselves and the ONLY thing I do for storage is cool the grain down when the weather changes in Fall or early Winter with a few days of turning the fan on.. No chemicals. I can go away and sell the next summer and the grain will be cold coming out the unloading auger in July. No bugs.

 

I tend to sell yearly, but I often don't sell until just before our harvests lately. My sales are remarkably even year to year. I can manage with delivery contracts to defer income and they are usually comparable to current prices. All I need to do is is go out a few months. I don't sell out into the future very far. I believe I do better waiting for the rallies rather than guessing or averaging. I usually sell the largest part of production on a good rally. All crops don't get hot at the same time and I sell specialty crops and it helps me defer selling those that aren't lively. Right now I have some barley (comparable to corn for feed value) that I've decided I will not sell as the discount to corn is too much. Somebody can come get it when they realize what it's worth. 

 

I will not sell into a steeply down market. I don't mind selling near what I think is the backside of a high top. I was on the verge of pulling the trigger half a dozen times since the first of the year on wheat when the market would fall away. As i saw the likely prospects for corn fall I held on after reaching the figure I thought I'd sell at for my next sale. Things change, and so do I. I made a 45 cent gain on that bit and then the writing was on the wall. I'm up $1 again and I really don't see a downside yet. I can sit and watch. I did move grain unpriced, which I have seldom done, but I figured by then the odds were with me even if I could no longer play the exporters whose game is volume and denial of volume from competition. I have never failed to extract another 10- 20 cents (or more) in the past. 

 

I'm not rich and I started with nothing during the mid 80's but, some of my neighbors counted on me going broke and are a bit discouraged by that. They've died or given up. I've made my mistakes but I've always been a marketer and have seldom missed a high.

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Senior Advisor

Re: Hahaha! ;)

Here's what I DON"T do. I don't try and dispose or commit my crop ASAP because of some sort of perceived risk of holding. I believe the risk can be higher of missing out on income. If my cash flow needs or margin was really problematical I might think differently but, I never have.

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Senior Contributor

Re: Hahaha! ;)

Come on Pal don't you know that one of the advantages on selling to early is that you can have monies sitting in your bank account gettting little or no interest

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Senior Advisor

Re: Hahaha! ;)

That is correct. Having cash in the bank gives you the where with all to make capital investment. Buying a farm and paying for it in a short time So I do need cash flow to retire the farm mortgages. They are all paid except one and that one will be paid in January of 2013.

 

I don't look at commodities as a long term capital investment. Land is and along with asset appreciation. you get earned income as well. Biut then Palouser does have an advantage in that he knows prices are going to rise if he only waits for it. I don't want to run a storage facility and address storage quality concerns. I like the cash that I can use to self finance things I want to do.

 

It's getting to be about time to buy another 80 acre savings account.

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Senior Advisor

Re: I post my sales

so that the viewers know what I did and when I do it. That doesn't mean I am any smarter than any one.

I contracted 2011 corn for $4.93 and beans for $11.34. Today that corn would be valued at $7 plus and the beans at $15 plus.  I do not have any regrets about previous sales. I chose prices that were adequate for a portion of my crop.

 

However, I do rue the day when beans or corn are extrodinarily high and I end up selling for much less. I done that far more than I would like to admit. Yes conversion to cash is important for my situation. For yours you may want to build more bins. Ha!

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Senior Advisor

Re: I post my sales

I don't want to be seen as criticizing you, I'm just keeping you honest  Smiley Wink

 

I don't think a matter of months on return really is a big deal but increases in return are.  Believe me, you have an advantage in corn country the last decade. You have higher grosses and returns and the land has appreciated in a way dryland wheat can't and won't, and we wheat guys would sure like to have an ethanol policy just for us. Then we wouldn't have a situation where corn is worth a $1 more out here than high quality white wheat for export. 

 

But, to compare apples to apples (we grow them by the way Smiley Wink  I think my style of marketing would work as well in corn. Especially since I hitched my wagon to corn some time ago.

 

But don't think I'm criticizing corn growers either. You have many advantages. You're land is flat, you've got humidity to keep the skin soft and you can see to the horizon (when the humidity isn't so high) and you get to use those cute little tractors that go in straight lines Smiley Wink

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