|
SEON | We are a hay producer and supplier f hay and straw to large dairies. We have 250 acres of marginal ground and the hay has played itself out and we are exploring options. One option is to switch to wheat for a year then go back into hay.
Advantages to this are;
1. allows reduction of hay inventory without having a fire sale.
2. increases straw inventory, which is a really, really attractive option....probably worth $15,000 if there is 1800 lbs of straw per acre.
Disadvantages are;
1. Risk of "take all" when wheat follows hay?
2. We are not set up for wheat....no drill, no combine, no sprayer, no bins, no dryer, no knowledge, no nuthin'.....
A few weeks ago I thought this wheat thing was a slam dunk.....Simply no till in some wheat and buy a contract to deliver some in the fall of '11for big money. I break even at 40bpa and have the straw as a bonus. Now I see there are a few things I hadn't thought of. Not the least of which is this basis thing that I don't yet understand. In fact, the more I look into this, the more I am realizing what an idiot I am .....for example I am totally oblivious to the meaning of this statement from another thread; [i]"I wish my protein was above 12 % where it could have potential later on in farm storage"[/i]......what is that all about?
So for now, here are my questions;
1. What is the purpose of the basis?
2. Who sets the basis?
3. If you buy a sell contract, does that lock in the basis also?
4. How out I find out what the basis is?
| |
|
New to wheat.....
