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| I agree with Sat's comments about Delay price/price later storage contracts to a certain extent..... I just want to comment on the fact that most of the elevators/commercials have tailored their grain policies to incentivize producers that don't have on farm storage to use this credit sale contract (DP storage). For example... most of the elevators up here in NCIA and S Minn... dry and shrink their bushels down to 15% and charge 4 to 5.5 cents a month for DP storage compared to putting it on warehouse receipt where it is shrunk and dried to 14% with a monthly charge of 6 cents. That 1% difference in shrink and cheaper monthly storage pushes farmers to take advantage of the DP storage more so than WH receipt. Most would agree that 1% is in place to cover the elevators behind when it comes to storage risks and other factors too. I would ask... Are these storage terms the same for a majority of elevators across the US?????
The area endusers NEED a constant flow of grain.... I can't help but think what basis movement would be like if we didn't have DP contracts. Makes me wonder if we would see basis strengthen considerably if they had to actually bid it out. I'm sure there's another side to this coin that I'm not aware of.
Most of the grain here in N IA stays here. There are good sized rail terminals around, but the most of these elevators up here are just truck houses.
I've always been fascinated with the merchandisers/originators comments on here... E insider, Ray, Rob, Maize. I'm forgetting a few, but you guys are a valuable resource!
I like John Burns comments on this subject. Link below
http://talk.newagtalk.com/forums/thread-view.asp?tid=662080&mid=557...
Kind of rambling post... but I wanted to post my thoughts on the subject.
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DP storage.....credit sale contract
