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I am just curious if anyone is using a little different marketing approach going farther out in the futures to extract a premium on their crop. From what I have seen this year with a disaster under our belt, the near term hopes for spikes in crop prices from these events never seems to materialize.

Here is what I do, basically I might sell a little in November for cash flow but I usually use the cash advance program for a bridge over the winter. Sell a little more just before seeding and then try to market the rest after crop is in the ground. Usually just use near term futures contracts, couple months out which are pretty flat. Little bit of a premium on crops sold in Q2 usually so try to hit that.

Wonder if there is a different way by storing longer and contracting a year or more out, combined with some sort of hedging strategy and then using cash advances for cash flow while holding. Not sure if cash advances can be taken on crop a couple years old. Never tried it before. Would be a much bigger investment in storage and some risk carrying it I guess. But margins are tightening and there has to be other approaches other than just get more land. That's pretty hard with prices hovering around $4500.
 

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There was $10.80 August delivery at the local crusher. Like how much do you need to be profitable???
When are you selling your November delivery?
 

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only sell a year out if its really worth it, if selling a year out from now at break even is not that profitable.
Like selling oats a year out at $3.50 is worth it but at $3 i wouldn't get too excited unless cash oats would be $3.25 if you catch my drift.
There has been carry in the market for canola and selling the futures that way could be smart, selling a carry in the basis I wouldn't do.Seen guys sell for a $-10 basis out to august at the crusher to only have a local elevator have a zero dollar basis.
If your stuck for cash why not sell to an elevator with a good basis and buy back in on the futures and have the margin calls tell you if your wrong.
On a side note it's march don't beat yourself up if you are not 100% sold on a market downturn, lots of acres to be seeded yet and lots to go wrong yet weather wise.
On a positive side note: "the CBOT corn market inverted for a while early this week, which is signaling higher corn prices are coming, and corn is king.
In 2013 we didn't sell much crop of the combine and went into may with 90% of crop in the bin, prices rallied and june and we emptied the bins. Marketing is patience most often I found.
Marketing advisers love these down swings in the market, that's when they pick up a lot of guys that lost "faith" in their own marketing skills. When markets rally they sign up the least amount of customers.
 

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I sure wouldn’t count on the basis being better at the elevator this year. I seen as high as a .70 spread in favor of the crusher right before the markets went to hell.
Not only that if you don’t have at least the basis in your going to be selling into new crop at least at our local crusher. They are practically bought up for old crop.
 

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I’m not paying interest to hold my grain longer to hope the price increases. Sell it when I need the cash and live to fight another day
 

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If I recall correctly cash advances on crops have an 18 month shelf life before going into default from the beginning of their program year which is April 1st, or 24 months for cattle with the same starting period.
 

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Cash advance should be banished. It distorts the premium for storage.
I dont think it distorts the premium for storage. This past January Bunge in Altona was picking 10.75 a bushel of canola for immediate delivery. Sure you have to be alert to those deals but the cash advance allows time for those deals. According to the Canadian Canola Growers , the beginning of the 2020 cash advance year they told me the phone is ringing off the hook. Its just another good marketing tool at your disposal.
 

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It's a great marketing tool for those who can't afford to hold sale till the spring to capture storage premium but are subsidized to do so.
 

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Nothing wrong with zero percent interest on the first 100 000 dollars, If you dont need the cash to pay debt , Put that money to work somewhere earning interest. Let the money work for you and not you for the money! If you have a good marketing plan established ahead of time you should not have to worry about storage problems.
 

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Those interest free loans are going to finish off lots of farms in next 18months. Nothing wrong with that money as long as you use it responsibly. Problem is guys are taking cash advances to pay daily operating expenses instead of paying off there trade credit to FCC, Scoitabank and Roba with it first. Other big problem with those stupid advances is nobody is policing it to make sure guys actually have the grain to cover amounts owed since they have gone to the honour system on repayment at elevators.
 

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They do, but without cash advances maybe those premiums would be much higher. You don’t think grain companies don’t know exactly when those interest free loans come do ?
Highly unlikely. Storage rates are set by the various exchanges and are part of what gives you the carry (premium) of the defered contracts. Most companies price off USA exchanges which wouldnt care about canadian cash advances let alone know when they're due and this part is just a guess but i highly doubt produces wait till the cash advance is due to do all their pricing. Also once the cash advance deadline is up the premiums for defered contacts dont mysteriously increase either.
 
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