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post #1 of 33 (permalink) Old 12-11-2018, 12:12 PM Thread Starter
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Big scheme going on in generics for our health .
Price fixing and it looks like something is become public.
Looking at my grain marketing I have same feeling .
Canola is basis off futures minus , saying itís market minus handling .
Wheat is futures plus positive basis , saying its market plus handling ?
With only a few players in grain handling left I would like to see investigations on price fixing .
Or do you think you get fair price ?

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post #2 of 33 (permalink) Old 12-11-2018, 12:20 PM
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Wheat is futures plus because the futures are in USD and they donít convert they just put a positive basis on. Minneapolis wheat is 5.75 which converts to $7.66 CAD. Do you still have a positive basis on wheat?

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post #3 of 33 (permalink) Old 12-11-2018, 12:25 PM
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post #4 of 33 (permalink) Old 12-11-2018, 03:13 PM Thread Starter
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post #5 of 33 (permalink) Old 12-11-2018, 05:47 PM
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That wasnít price fixing
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post #6 of 33 (permalink) Old 12-11-2018, 07:45 PM Thread Starter
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Grain futures has nothing to do with my farmers price.
P&H buys grain and goes directly to there own mills .
Car gill sells toward over hundred countries , they don’t pay any broker .
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post #7 of 33 (permalink) Old 12-11-2018, 08:14 PM
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Grumpie do you ever sign deferred delivery contracts? I assure you that all the grain buyers are active participants in the futures market. Every tonne of grain you contract to deliver for a certain price at a future date is hedged by the grain company by buying futures positions at the relevant trading exchanges which they sell back when you deliver (or did I get that exactly backwards?), thus ensuring that the agreed-on price will not lose them any money even if the market moved against them.

In fact, you are also free to also participate in the market by hedging (selling futures) the grain you have in storage. You needn't just take the grain elevator's prices. You can identify the price you want, based on the futures prices, and sell futures contracts locking in that price. When you deliver your grain to the elevator, you take the price they offered, and then you buy back your futures contracts on the market. The sum total of this should equal that price you identified in the first place. I think if you do this you'll understand that the price you're offered at the elevator is actually based on the futures price (this process is exactly what the elevator does). In this scenario even margin calls won't hurt you because this is a hedge, not a spec position. You may "lose" out if the market goes against you, but the doesn't matter; the purpose of the hedge is to lock in a price against down (or up) movement. Additionally, options could let you buy into some of that otherwise lost gain in the market.

The point is, futures trading is a fundamental part of pricing both for the seller and the buyer.

If you are correct that futures have nothing to do with the prices you're being offered, then why do they fluctuate so wildly throughout the year, generally in concert with futures trading prices?

It's true that fewer players distort the markets by reducing competition. But price discovery is still happening on the futures market, even if the mills are completely, vertically integrated.

In our area we have more local competition for grain buying than we used to.
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Last edited by torriem; 12-11-2018 at 09:50 PM.
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post #8 of 33 (permalink) Old 12-12-2018, 12:22 AM
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Quick Question Torriem, what happens in durum markets where there is no future price contracts available? How do they hedge that bet?

That is the one rather large concern I have is the difference between paper and real product. At times, future markets can have 10 times the paper floating around than they actually have product to back it up. That is a problem IMO. I have long said stock markets are good but when you can buy stocks long or short at the same time, you have set up a gambling consortium!

I have noticed some very interesting occurrences recently involving trading in a couple day period. They all appear coordinated or at the very least very reactional pricing.

I follow Johnston's Daily. One day a rather large wack of feed durum traded very quickly. His report came out in the evening. The next day the same thing occurred with red lentils that triggered in very rapid succession too. I am trying to figure out how this occurs in our system.

My lentils trigerred at .16 the very same day as these ones did (November 7). Mine triggered with Richardson Pioneer (RP). I know I wasn't the only one at that price as there was lots of people delivering these lentils to RP this week just as I was. Was it all the same company who bought? Who pulled the trigger? Who scared the market into action? Johnston's site triggered that day as shown below. Does RP buy through them as well? (21 Super Bs besides RP's)

"RED LENTILS
Traded 84MT / 2 B Loads FOB Richmound, SK for $ .16/Lb Dec, 2018
Traded 126MT / 3 B Loads DLVD SK Plant for $ .165/Lb Nov-Dec, 2018
Traded 420MT / 10 B Loads FOB Prelate, SK for $ .16/Lb Nov-Jan, 2019
Traded 252MT / 6 B Loads FOB Fox Valley, SK for $ .16/Lb Nov-Jan, 2019"

The day before I never saw so much feed durum triggered and traded all on one day! The market was quiet for months with not even a murder. Then on Nov 6/18 this occurs. What psychology pushed this grain into the market. (29 super Bs!)
"FEED DURUM
Traded 440MT / 10 B Loads FOB Consul, SK for $ 5.90/Bushel Dec-Jan, 2019
Traded 176MT / 4 Loads FOB Consul, SK for $ 5.90/Bushel Dec-Jan, 2019
Traded 84MT / 2 B Loads FOB Fox Valley, SK for $ 5.50/Bushel (High moisture) Jan, 2019
Traded 42MT / 1 B Load FOB Fox Valley, SK for $ 5.50/Bushel (High Moisture) Nov, 2018
Traded 528M / 12 B Loads FOB Consul, SK for $ 5.90/Bushel Dec-Feb, 2019"

Meanwhile, we read about a week or so later, that the monsoon rains aren't falling in India and will cause lentils to rise. Who and how did these people have the foreknowledge that the farmer doesn't so that they quickly can jump on and buy cheap product before the news of drought hits?

Again, like Grumpie, I am looking for logical answers. I am not trying to be a smartass - just plain curious how it works and maybe try to figure out how I can get the "insider" information required to become rich!
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Last edited by RunninREDharD; 12-12-2018 at 12:46 AM.
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post #9 of 33 (permalink) Old 12-12-2018, 12:48 AM Thread Starter
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Egypt , maybe largest grain buyer , 99 % buys grain through tender .
Maybe futures respond after tender is granted but the “sale “ has zero relation with futures .
100 years ago a farmer could maybe get a honest price with futures ( speculators game ) market .
Today I highly disagree.
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post #10 of 33 (permalink) Old 12-12-2018, 10:47 AM
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Originally Posted by torriem View Post
Grumpie do you ever sign deferred delivery contracts? I assure you that all the grain buyers are active participants in the futures market. Every tonne of grain you contract to deliver for a certain price at a future date is hedged by the grain company by buying futures positions at the relevant trading exchanges which they sell back when you deliver (or did I get that exactly backwards?), thus ensuring that the agreed-on price will not lose them any money even if the market moved against them.

In fact, you are also free to also participate in the market by hedging (selling futures) the grain you have in storage. You needn't just take the grain elevator's prices. You can identify the price you want, based on the futures prices, and sell futures contracts locking in that price. When you deliver your grain to the elevator, you take the price they offered, and then you buy back your futures contracts on the market. The sum total of this should equal that price you identified in the first place. I think if you do this you'll understand that the price you're offered at the elevator is actually based on the futures price (this process is exactly what the elevator does). In this scenario even margin calls won't hurt you because this is a hedge, not a spec position. You may "lose" out if the market goes against you, but the doesn't matter; the purpose of the hedge is to lock in a price against down (or up) movement. Additionally, options could let you buy into some of that otherwise lost gain in the market.

The point is, futures trading is a fundamental part of pricing both for the seller and the buyer.

If you are correct that futures have nothing to do with the prices you're being offered, then why do they fluctuate so wildly throughout the year, generally in concert with futures trading prices?

It's true that fewer players distort the markets by reducing competition. But price discovery is still happening on the futures market, even if the mills are completely, vertically integrated.

In our area we have more local competition for grain buying than we used to.
Yes you got that backwards but you have a good grasp of how the markets work and how they can be used to your advantage. Not enough farmers understand this IMO.

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