I live outside of Albany NY and we have movements to the Port Of Albany from CP and CSX. Our local recievers are Dairy Farm Feed Mills. I hear in Canada its is during the winter and Pacific Northwest its late fall or winter. Iowa it might be the early fall. Can I get a breakdown by region on grain movements like say the South that has poultry and the west which has beef feedlots
On the great lakes its the fall.
So what was the big deal about grain moves in Canada in the dead of winter? Winter Wheat?
Unlike fresh produce, grain can be stored and shipped when convenient, up to a point. If the storage facilities at the sending end are full, it may need to be moved more quickly.
Further, the receiving facilities may not be able to handle/store all the product that could be shipped to them. So it is held at the sending end. I'm not sure that grains do the "storage in transit" (SIT) thing - someone else will have to address that.
Thus elevators and other grain handling facilities may hold their product until shipping is available, or until the selling price is to their liking. Or both.
Winter wheat is actually harvested in late summer or early fall. It's called winter wheat because it is sown in the fall, thus spends the winter in the ground.
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Grain is always moving somewhere. under long-term supply contracts. Here in the Ohio River Valley, quite a bit of our grain (most of it corn and soybeans) has a natural market in the Southeast for livestock feed, and moves in a relatively steady stream all year long. The stuff tends to "store" up here and moves south on something approaching a predictable schedule. Ethanol production takes up a good chunk of corn production, and also tends to have a fairly level demand pattern.
There is a annual mid-summer rush in the Plains of wheat, and the typicial fall flows as corn and soybean come off the fields. While many farmers can now store part of their crops, the excess still has to move to market or to storage somewhere at that time. What can REALLY throw a wrench into the works is a coincidence of worldwide grain demand (often tied to crop failures elsewhere) and a relatively weak US dollar - this opens up a huge export market that can quickly put grain prices in orbit. When that happen, every grain dealer and his dog wants to ship trainloads of grain to the ports - and that can take place at any time.
So what was the debaucle in last winter in Canada and the shortage of grain cars what was going on in the grain market to cause a mid winter rush?
A couple months ago the Wall Street Journal had an article about how many farming regions now have the ability to store close to or as much as an entire year's harvest. Thus, the grain doesn't have to be shipped as it comes in off the filels - the farmers (or co-ops) can store it and wait until the price gets up to a level that's more to their liking. (One effect of that is to give them more pricing power vis-a-vis the major buyers, like General Mills and other agri-business processors).
On the other hand, when the price does get to that level, a mad rush then occurs to sell and ship quickly to take advantage of those high prices. That kind of ebb-and-flow of volume can wreak havoc with railroad operations that are better with more organized and steady flows.
- Paul North.
The grain shipping season these days is when the price is high.
When the price is high, all the sellers want all the grain they have shipped to the buyers yesterday. There is no in between.
The money men in the grain business believe you can transfer several million bushels of grain with the same stroke of the keyboard that they can for the millions of dollars that change hands for the transaction.
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trackrat888 So what was the debaucle in last winter in Canada and the shortage of grain cars what was going on in the grain market to cause a mid winter rush?
Several factors were involved. For the first several months the farmers and/or the grain companies were holding back, perhaps hoping for higher prices. They have the storage capacity to do that in a normal year. When they realised the magnitude of the record bumper harvest, their scheme backfired because they did not have enough storage to handle it all. The reduced volumes of the first few months changed to a massive surge as everybody wanted to move their grain immediately.
Then add in a particularly rough winter causing operating challenges for the railways. Temperatures of -30 or blizzards make for difficult railroading. In the past railroads often had enough slack in the trackage and manpower to adjust for or recover from such challenges. That made for higher operating costs, and modern business philosophy for all businesses (not just railroads) worships at the altar of "mean and lean".
I always assumed that Grain Futures that are traded on the Chicago Board of Trade would have the grain spoken for by the time of Harvest and whoever holds the futures contract has to take delivery of the grain via Corn,Soybeans,Wheat ect. The whole idea of Futures was to prevent this traffic jam and have a orderly market ready for consumption from the Farmer to the Bread Beer or Steer company at time of harvest.
trackrat888 I always assumed that Grain Futures that are traded on the Chicago Board of Trade would have the grain spoken for by the time of Harvest and whoever holds the futures contract has to take delivery of the grain via Corn,Soybeans,Wheat ect.
I always assumed that Grain Futures that are traded on the Chicago Board of Trade would have the grain spoken for by the time of Harvest and whoever holds the futures contract has to take delivery of the grain via Corn,Soybeans,Wheat ect.
It is more complicated than that. For grain futures, there are five months during the year for which futures are traded (except the 3 soybean contracts which have more). You can deal in contracts expiring on March 14th, May 14th, July 14th, September 14th or December 14th. Other farm products, such as OJ, cotton or sugar are on another schedule.
Many players on both sides of futures transactions are investors who have no intention of ever owning a single bushel of the crop. The contracts usually are settled by financial payment rather than the exchange of goods. The point of physical settlement is elevators in Chicago; I doubt that the railroads could begin to handle the quantities of grain represented by outstanding contracts.
1) Farmer Grows crops.
2) Farmer puts crops in bin.
3) Farmer sits around the table drinking coffee and listening to the radio.
4) When radio says price is good, farmer takes crop to market (local elevator)
5) Local Elevator stores the crops
6) Local Elevator manager sits at table, drinking coffee, listening to the radio.
7) When radio says price is good 958 Elevator managers call the railroad to order several 100 car shuttle trains.
8) Railroad Dispatcher needs to change his pants.
Don't know what local corn farmers are thinking. Maybe they were holding for a better price, if price did not come, they had to take corn to market at whatever price to make room for new corn. Apparently the local ethanol plant *likes* the price of corn because there is always a string of 30-40 trucks filled with corn waiting to get in. The corn is stored out in the fields in 200 foot long 10 foot diameter plastic baggies. Several hundred of them, and the plant is still buying. Apparently most of the corn is local since I see few corn hoppers arriving. They have to unload at the elevator, trucks can drive into the fields to unload into the plastic baggies.
I wonder what the farmers will be growing this year if the elevator has so much grain stored at such a good price that would seem too low for the farmers.
LION does not know. LION is a city boy, what does him know about a train or a farm. Him just tells what him sees as best him seas it.
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"The contracts usually are settled by financial payment rather than the exchange of goods." So what I have suspected all along that the CBOT is legalised gambling and the original purpose of the CBOT of having ready and orderly markets so grain does not rot and farmers have ready cash (via put or call contracts) to plant today for tomrows crop is gone?
Lion well now that you have gone from Brooklyn/Bronx to the wilds of the North Country you realise that Wheaties does not come FROM a box!
If there is money in a market - it is legalized gambling. That is our monetary system and the people that run it and operate within it.
That is the problem of dirivitives that are so far out there that are divorsed from having any social good or funtion.The Stock Market makes it possible for companies to start and eliminate debt so they can grow. The Chicago Board of Trades mission was to have a ready market for grain so it does not rot in silos waiting for a buyer. The Future Contract was to sell tomrows grain at a set price so you would have a ready buyer and user. The Speculater would take the risks but at the end of the season the bread company would get their grain and the farmer would feed his family for grain sold in the future.
trackrat888 "The contracts usually are settled by financial payment rather than the exchange of goods." So what I have suspected all along that the CBOT is legalised gambling and the original purpose of the CBOT of having ready and orderly markets so grain does not rot and farmers have ready cash (via put or call contracts) to plant today for tomrows crop is gone?
Gaming type gambling involves the roll of the dice, draw of the deck, or other inconsequential matters. Financial investing (gambling?) in futures involves food, fuel, and other necessities.
MidlandMiketrackrat888 "The contracts usually are settled by financial payment rather than the exchange of goods." So what I have suspected all along that the CBOT is legalised gambling and the original purpose of the CBOT of having ready and orderly markets so grain does not rot and farmers have ready cash (via put or call contracts) to plant today for tomrows crop is gone? Gaming type gambling involves the roll of the dice, draw of the deck, or other inconsequential matters. Financial investing (gambling?) in futures involves food, fuel, and other necessities.
As well as all the inconsequential 'hysteria' about local & world events that the players can interject into their 'negotiations' for their futures trades.
MidlandMike trackrat888 "The contracts usually are settled by financial payment rather than the exchange of goods." So what I have suspected all along that the CBOT is legalised gambling and the original purpose of the CBOT of having ready and orderly markets so grain does not rot and farmers have ready cash (via put or call contracts) to plant today for tomrows crop is gone? Gaming type gambling involves the roll of the dice, draw of the deck, or other inconsequential matters. Financial investing (gambling?) in futures involves food, fuel, and other necessities.
BroadwayLion [snipped - PDN] . . . I wonder what the farmers will be growing this year if the elevator has so much grain stored at such a good price that would seem too low for the farmers. . . .
0) Farmer decides what crops to grow.
trackrat888 That is the problem of dirivitives that are so far out there that are divorsed from having any social good or funtion.The Stock Market makes it possible for companies to start and eliminate debt so they can grow. The Chicago Board of Trades mission was to have a ready market for grain so it does not rot in silos waiting for a buyer. The Future Contract was to sell tomrows grain at a set price so you would have a ready buyer and user. The Speculater would take the risks but at the end of the season the bread company would get their grain and the farmer would feed his family for grain sold in the future.
Paul_D_North_Jr BroadwayLion [snipped - PDN] . . . I wonder what the farmers will be growing this year if the elevator has so much grain stored at such a good price that would seem too low for the farmers. . . . Wall Street Journal last week said less corn, more soybeans - about a 2% - 3% (+/-, as i recall) shift predicted, but that could change as the season progresses and price and weather affect the farmer: 0) Farmer decides what crops to grow. - Paul North.
Wall Street Journal last week said less corn, more soybeans - about a 2% - 3% (+/-, as i recall) shift predicted, but that could change as the season progresses and price and weather affect the farmer:
Farmer decides what crops to grow?
Well maybe. Out here for many years Wheat was King, then they opened some ethanol plants in the state and they were buing corn at good prices, and cut ADM et al out of the loop. So the farmers grew corn, they took land out of ARP and grew even more corn. Corn all over the place. Price of corn went down, ethanol plants smiled. Farmers held corn waiting for a higher price, meanwhile planting more corn. Now the must sell the old crop at whatever price to make room for the new crop. Ethanol plants smiled, and stocked up more corn.
This year, as you have noted, planting of corn are expected to be down.
Politicians complain that we are burning food in our cars while people are starving. But then politicians do not have functioning brains, but only gut reactions to polls. If saw grass were used to make ethanol, the farmers would grow saw grass.
First Ethanol Corn is not table corn, it is grown to be ethanol corn. If other crops are not grown that is a different issue, but the root issue is and has been demonstrated, that farmers will grow whatever crops people want to buy. They could feed the whole world AND grow crops for ethanol, but the sticking point is that they must be PAID for their crops. They do not, and cannot, work for free.
You pay, and we grow whatever you want to pay for. The farmer has input expenses: seed, fertilizer, fuel, amoprtization on land and equipment, insurance, salaries, loan costs, profits and much more. And remember, the farmer only gets paid once a year.
He will grow whatever you want, but he must be paid, AND his plan must meet with the approval of his lending agency before he can do anything.
trackrat888 Um Numbers Running from the 1940s to the 1970s would take numbers from the stock market another number from the weather report and whatever horse finished at the track like Gluefactory finished in last place like 9 at Saratoga. Seems like the CBOT is the biggest numbers racket in the world. Don King was a major numbers runner before the legalisation of lotterys see for more info on the Numbers Racket- https://en.wikipedia.org/wiki/Numbers_game#Cleveland
Another important function of the futures market is price signaling. Within some constraints, a farmer in the corn belt can switch the proportion of his crop between corn and soybeans readily. If he knows his costs for each crop with any accuracy and the probable yield range of his land for each crop, the futures price allow the farmer to base his planting decisions on the greatest profit potentials. Right now, for example, you can obtain corn futures quotes all the way out to December of 2018. The information in the futures market makes his planting decisions more rational even should he choose not to participate.
They also operate to provide information on which to base the farmer's sell it or store it decision.
Finally, the price the farmer receives is not the CBT quoted price. The quote at the local elevator or ethanol producer is reduced by the amount the railroad would charge to move the crop to Chicago even though the vast majority of the crop will not go there.
http://www.trainboard.com/railimages/showgallery.php/cat/500/ppuser/4309
Why are farmers being charged for trip to Chicago for their grain? I assumed that the end user pays shipping and handling.
The poultry company in my hometown used to pay local farmers the CBT price per bushel plus 25 cents, because they would have to pay more than that to ship the grain from the Midwest (the source of the bulk of their corn).
Grain comes thru here every day, or at least hopper cars that I believe are hauling grain. Assume it will be used for animal feed; most people don't know it, but Florida is a major cattle producing state.
trackrat888 Why are farmers being charged for trip to Chicago for their grain? I assumed that the end user pays shipping and handling.
Farmers are not being charged anything. The CBOT price is FOB, free on board (railcar) at Chicago. If a farmer in Somewhere wants to fullfill a put contract by delivering his grain he has to pay the freight to Chicago to do so. That being the case, it is only logical that the price at Somewhere is CBOT minus freight to Chicago.
Now imagine that a real buyer wants to buy in the cash market. Regardless of where he intends to take the grain, the most he will pay is the Somewhere price. To make it simple, assume he will pay the freight to his place. He buys FOB origin and the seller gives the railroad a bill of lading that indicates freight collect. Freight collect means that title passes at origin and the buyer pays the actual freight from Somewhere SD to Whereever he wants it.
Not very complicated.
Mac
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