Ethanol Plants...

[Red Steele]

Don't know if it extended past the MN borders or not, but a bankruptcy judge made the farmers that had corn contracted at high prices, deliver and take the current market price when a chain of ethanol plants went bankrupt. That had to have left a bitter taste in those farmers mouths. One reason why I am not a big fan of delivering grain and taking deferred payments.....I have never been burned but my father was once when I was little when a creamery went bellyup and he lost a milk check.

Could not be all that far away from Ray's big plant...I am surprised that Ray would not have remembered that.

[sw363535]

I am in the sw where the feedlots are along with ethanol---- but I agree with your point.

But Ethanol will not keep corn acres up with costs of production where they are.  Government will not help.  They will use wheat or whatever is available.

[kraft-t]

Ray.. He must think your going to reneg on the contracts because the cash market is much lower than the signed contracts. Do you have a history of doing that?

It seems like there is always some boogey man that is going to mistreat farmers. That cargill bunch, the board of trade and the usda are all in cahoots to cheat the farmers.

The market is not always a kindly place. There are risks involved and sometimes the outcome is painful. The trouble is that farmers cannot recognize the $7 corn might be $3 corn next year even though they know that every farmer is doing their best to raise a bumper crop. They may not always do that but it won't be for lack of trying. I suspect that most farmers would produce more even if they knew over supply would break the market. There is just no satisfaction in producing a substandard crop.

They will produce plenty and the boys from Illinois aren't even talking down their crop prospects. When they whine alot it means their corn will yiel 205 bushels instead of 240 and i haven't heard them whining yet. Maybe there won't be a record crop but there will be enough and the market will not pay too much for enough.

[Red Steele]

If you wake up one day in late August hearing "here's Johnny", and your fields all turn black, you will learn the value of forward contracting in one easy lesson.

Saw that happen in August,1974 on some of the finest potential crops my father ever raised....went from "crops sure look good", to basically nothing left to harvest in short order. I believe it had been dry all summer too, and Dad had to buy hay for a good chunk of that winter and pay for trucking to get it to southern MN. 

Makes me wonder why the endusers are not busy filling up every space and orifice they have available with high quality 2013 corn at bargain basement prices.

[sw363535]

Was bigger companies for me---- Cargil being one.  ---- Just because they could.  Moved out of the area within 5 years after burning loyal customers.

[rayjenkins]

so what is it that Cargill did to you, SW ??

[ECIN]

Makes me wonder why the endusers are not busy filling up every space and orifice they have available with high quality 2013 corn at bargain basement prices

Why would they want to do that for when corns going down to 2.75 ?

[roarintiger1]

Allrighty then.........they should be filling everything up then I guess....  🙂

[sw363535]

Kraft,  we had two events within a few years. In the eighties early I think.  Whenever Cargill left.

I farm close to the OK boarder.  Cargill had elevators in the three closest towns.  The one in OK -- 14 miles south had a better basis because of a different and good rail line.  14 miles east a nickel less in Ks on same rail and 20 miles northwest without much rail 15 cents less.  

We forward contracted on a good basis early.  In August Cargill held a meeting with the customers of the okla. elevator telling us about big improvements, including moving the offices of OK to the northern one in Ks.  Promising if we would deliver to the OK facility our contracts would be honored as written.

When payup time came the checks were ordered out of minn.(micromanagement ) and we got our original cbot board price at the Kansas harvest delivery basis.  The thirty cents we lost was all the profit on low priced corn and with a 30 cent in and out charge we were in trouble even if they let us "out of the contract" they did not honor.

We called it "too big to care".   They were out of the area in a short few years.

Not too long after in the 90's, Collingwood, controlling 95% of the grain storage in a two county area, the big dog locally thought of an even better one in a year like this and saved their elevator space for contracted customers and unmoved wheat, put up a lot of ground storage and wrote a new rule while dropping their already low basis 25 cents. With all elevator space tied up came this during harvest-- "Corn going into ground storage must be sold across the scales so we can move it before it is damaged."

you could go north and loose basis or south.  We hauled everything 70+ miles south into Texas and got a 80 cent basis improvement. That is how far they had depressed the local basis.

By 2003 ADM had bought out Collingwood.  We were producing more than the decade before.  I was concerned about storage and delivery so I contracted early to be sure that I would have a place to take it when corn harvest started.  We had expanded a neighbor and I were working together.  Managers changed at the local elevator and when I pulled across the scales with the first load the young man asked me if we had a contract.  I knew when he said it we were in trouble.  They did not expect us at all and forced us to deliver it to a terminal elevator which was not that far away----- adding 40 miles to each load for a 3 cent bonus. 🙂   Problem was the terminal worked a 9-5 work day and we were forced to unload to a ground pile auger--- when the customers who could go somewhere else or trucks delivering ADM's grain were ushered through the quick dump modern facility .  Slowest harvest I ever worked through ----- believe me I have no problem with numbers, I know how much money you are loosing when your delivering 200+ bpa corn at 10 and 11 moisture and the crew is waiting in the field for every truck.

These are the things that inspire the building of private elevator storage,  hedging ability, and end user connetions.

I am sorry I over reacted to the "today's grain merchandising" comment.  It brought up memories,   I guess I am not over them yet.

Contracting guarantees delivery and ownership. That is a lot to trade for whatever you received in return.  And there are many ways that contract can be "not so good" for the producer.  

I have found the end users want to find agreements that work for you and them ---- and appreciate a good product.  The guys in the middle, maybe maybe not. 

Even within the same company.  My experience is Cargill folks in processing are great to work with.  We ship into the Wichita facility regularly.  Or did before this post.  🙂   

[rayjenkins]

basis in Eddyville is +7U,,,,,,which is -4 Z.....

expect harvest basis to be -25Z to -45Z

not going to own any more old crop corn than it takes to get to new crop....

very strong export loading program is helping support late summer basis

Ray J