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Senior Advisor

Re: futures now

ray ole buddy...his point is pretty clear...you just wrote a "textbook" answer to a real world question....

 

ih, and a number of us here, have lived it real time for a few decades at this point, it is not so easy

as your textbook claims....exit the hedge at a profit during a LOCAL AREA crop issue. See, that

is problem, my crop size is not 100% correlated to CBOT pricing or local basis....the slippage can

be quite extreme actually (40% in 1991 for example).

 

Plus, many of us have generated very positive rates of return over the years managing our

farms (well north of 20% ROI fwiw with extremely low risk by financial mgmt standards)

....so your stereotyping is pretty immature, ill-informed, and just frankly stupid.

 

Off to the big green box to do what I love, shell corn on a crisp clear sunny 50 degree fall day.

 

Senior Contributor

Re: futures now

The general rule in any financial investment is when in doubt, get out. So if you have crop damage when you have a hedge position in place, and you're not sure if its a local problem or a systemic one, close the hedge. You're never going to make delivery on the hedge to begin with, you will either close it or roll it forward before the first delivery date, so if you're worried that you may be caught in a promise to deliver a crop that never materialized, you won't have that problem.

 

Next about slippage, if you're growing any ag product that trades on the CBOT, then you are correlated in those products. What you will be paid for those crops is based off where the exchange trades. So to think that a hedge in those products would not work well for your crops really defies reality. Have you ever done a mock hedge transaction to see how your crops have fared against the exchange traded crops ? Please provide those details and enlighten us.

 

Regarding what you have achieved in the past, congratulations. I doubt you will be able to repeat that performance not because you are not a good farmer, but because the profit compressions occurring as agricultural prices recede lower is inevitably going to squeeze you into both operational and capital losses. Its a huge error to try driving the car forward while looking in the rear view mirror, history is littered with the remnants of companies who failed to adapt to the changing business practices and environments they suddenly found themselves in. And if you're going to do the same practices when the markets go against you as they have for the last five years as you employed when markets were in your favor, you will not survive.

 

One other point...if you can't converse with me in a respectful way, please don't bother writing to me. You know just as I do that the financial practices in your industry leave much to be desired. If they didn't, 40% of your colleagues wouldn't be sucking at the government tit, taking $20 billion of American taxpayer money every year. I guarantee you that if I looked at your books for just a few days, I could prove to you that you stone age financial practices are costing you a lot of money now, and maybe your farm later. So when you call me names as you did in your post when most of the people who analyze and invest in the agriculture industry know that I am correct, you not only offend and insult me but you show your own ignorance to anyone reading here. 

 

If you think I am wrong about the need to hedge your production inb a bear market, fine, don't do it. Maybe you'll be lucky and live long enough to see prices return to a bullish trend. But if they don't, then you will live to regret that you didn't listen to the sound advice that you were given for free and discarded because you think it didn't pertain to you.

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Contributor

Re: futures now

Last spring I sold a sizeable amount of corn out if the bins, I needed cash to operate, I took one of the top “paid” advisors advice you speak of and bought a position back in the market, he got his fee, I spent $.10 a bushel doing it. He got his money, I sold at the high and pissed away $.10 a bushel. So I told the traders and the market I was happy with less... when you have a basis of .50 minimum that bites hard... I believe if the traders had to take delivery of the commodity or deliver the commodity you boys would be screwed. You are trading way more of everthing then what is raised.. what would happen if the NYSE let traders trade 3 or 4 times more stocks then a company has be traded every day? I would suspect you would crash the value of that company just as you have the commodity prices! When an advisor try’s to sell his services to a farmer and jokes that each on of his divorces cost him over a million in cash, a guy should run.,.and that was from a top Chicago advisor... he always get his fee and the farmer get to take the fall when the advice is wrong.,, of the advisor had to take the loss I bet he wouldn’t advise much. And if you had to take the loss on your wrong advice to a customer Ray you wouldn’t advise either!
Frequent Contributor

Re: futures now

Don't you understand, silly?

See, Ray is different than the other guys.

He is a skilled analyst, so therefore he knows which way the market will go.

Everyone else is just guessing.

Senior Contributor

Re: futures now

Yes, I am pretty good at knowing where the market goes, but I do not sell my advice, There are good advisers who are very good at figuring out where the market is going, and they can prove that they have a successful track record. Those are the guys you want to partner with, because they can make you money. 

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Contributor

Re: futures now

Ray should be the richest man in the world If he knows what the market is going to do!! Don’t you all agree? Heck every trader should be a billionaire and be keeping their secrets instead of selling their services, unless they just want to spread the wealth!! 😂
Veteran Contributor

Re: futures now

Hey Ray in one sentence you say if you cant converse nicely with me dont converse with me and in the very next sentence you denigrate farmers by saying they are sucking at the government tit.

Take your own advice.
Senior Contributor

Re: futures now

Couple of advisors recently that come to mind from Iowa and they supposedly had a good track record most advisers don’t have a good farm track record
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Honored Advisor

Re: futures now

Monkey with a dart
Advisor

Re: futures now

What ever Ken. Such a Rulon answer if I ever heard one. Fact is you where bearish at the bottom like the paper trader. Now you will talk like you knew at all along like gulke and you positioned your subscribers perfectly.
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