Farmers advised to shop crop around

Prices changing daily | Delivery opportunities can pop up one day and close the same day

BRANDON — Get marketing but also get shopping, adviser Brenda Tjaden Lepp of FarmLink Marketing Solutions told farmers at Manitoba Ag Days.

There’s no reason to hold back from moving old crop and contracting delivery for new crop, but farmers shouldn’t just take whatever bid their usual buyer is offering.

“You’ve got to shop around bids,” said Tjaden Lepp during the Manitoba Canola Growers market outlook session.

“There is a dollar to two dollars a bushel difference between buyers on any given day in every community.”

Tjaden Lepp said basis volatility is wild across the Prairies. It can change by dozens of dollars a tonne at a moment’s notice, and often is a meaningless concept if grain companies aren’t actually accepting crop at that location.

“When there’s no bid, you don’t have a posted basis,” said Tjaden Lepp.

The average basis for canola in central Saskatchewan recently was about $50 under, but on the day she spoke the basis in Yorkton, Sask., was just $35 under, she said. However, that could disappear any time, which was the point. For instance, she said one grain company had been offering a $55 under basis, improved it to $38 under for 18 hours and then pushed it back out to $52 under.

The same instability also applies to delivery possibilities.

For example, an eastern Alberta grain elevator had been plugged, was suddenly able to move some crop, offered a cash price of $9 per bushel for canola and found lots of farmers rushing to respond.

“It lasted an hour and a half” before the offer was ended.

Tjaden Lepp said farmers don’t have a good reason to hold back from contracting off the combine or early 2014-15 sales because the appalling basis levels and glutted grain system will remain well into the new crop year. Farmers hate to lock in historically bad basis levels, but cash flow requirements need to be balanced against that reluctance.

“Don’t just know that (you need to make harvest time sales),” said Tjaden Lepp.

“You have to have a plan to deal with that. I’d get that plan moving sooner rather than later, otherwise you could be out of luck.”

The same goes for selling old crop now. There’s no reason, based on fundamentals of supply and de-mand, to justify generally better prices, so farmers need to make sales.

The best bet for getting a better return is to get the best basis possible, which is done by calling around.