What to do if you booked to many bushels
Hello I’m a beginner farmer grain didn’t turn out like I wanted to I have about 5000 bushels that I’m not able to produce what is the process
You have to buy them back or rebook them at a discounted rate( usually .06 to .08 cents per bushel) for next year. Buy back will depend on futures pricing. Probably best to check out buy back price now.
That is how it works around here anyway. Hope this is helpful.
With market low will they help me?
Talk to who you booked it with. They’ll either let you roll it to next year or buy it out. Varies by who and how you booked it.
If it's at a decent price see if your neighbor wants to sell some to cover it win both ways.
I have bought from a private grain elevator in the past to cover extra contracts and won on both ends. Collect insurance on bushels short and buy grain under my contract price to cover. I usually market directly to end users that pay above the elevator price. I do some drying and storage with the private elevator to cultivate the relationship.
Another option is to explain to a neighbour that you did a whoops ask if they will sell to you at market price I can bet they’ve been in the same spot
Luck you only have to deal with 5,000
Had one Mill manager tell me if you push hard enough they will let you out. His exact word "What can we do it's not like we can come and get bushels out of your bin that are not there. They will require you to show us your Insurance so we know that your not lieing but nothing they can do about being short." Saw it in 2008 the boys in Montana Durum hit 20 dollars and all of a sudden they didn't have the bushels to fill there contracts. The Mill went after them but in the end the Mill got screwed and started to only buy from the elevators for a few years. made it tough on us because we lost our market and had to relie on the elevators to give a decent price.
Usually the roll to the next crop year will depend on the Dec to Dec spread plus a fee for rolling 5-10c usually. Right now corn is gonna cost you about .25 on the spread if its beans your looking at a dime before fees. If you sold higher than current market prices the elevator will usually let you out or as others have said you can buy some bushels off a neighbor. Either way you just need to pencil out all the options your buyer gives and do what is the best in your situation.
Did this a couple years ago in 19 when everything flooded. I ended up buying the difference. Luckily prices had dipped tremendously from the time I contracted so I was actually able to make money on the deal. Doubtful I’d get that lucky twice. But one thing I’ve learned is when you take on a new piece of ground you know nothing about it’s good not to contract grain dependent on those bushels for at least a year or two till you figure out what you can actually produce on that ground. Another good tip I learned from my dad was don’t contract a whole lot over your break even price. That way you are covered but still have some flexibility.
Can you explain more about your dads advice on contracting over your break even price?
What is you futures month you sold in and what is you futures price and your basis?
It really depends on what it is you are selling and who you are dealing with. Every place is different we had a local issue that had farmers selling grain and higher prices and then rolling out the lower contracts. Their was a large lawsuit that ensued and found that the farmers were in the wrong based on their contracts, but by the time it was resolved the elevator went broke and the farmers got away with it.
I too thought I was going to be short on last years crop so I had discussions with my grain marketer about this very subject. Basically in that case if I couldn’t deliver the contract said I had to buy the difference so it would have been about a $20,000 mistake. Luckily test weights were good and I had an extra 2500 bushels at the end.
Basically talk to whomever you sold through and see what their policies are. It may hurt the pocketbook, but you won’t ever do it again. Easier to learn the lesson when you are new then when you are 20 years in.
For anyone curious here’s a link to the story I was talking about from the local area.
Talk to your elevator but your Options would be Roll it, Cancel it, or buy grain to cover it.
I agree with iL guy. If you choose to get out of the contract. They will make you pay difference in cash that day. Don’t let them charge you a cancellation fee. If they owe you money don’t let them get out of that. Coops and some elevators will keep the money. They will tell you it’s illegal to pay you. It is not illegal. They are just dishonest. Cargil bungee Chs. Will all not keep any of the money. Coops love to pull this shit.