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Won't be able to come anywhere near filling rented bins. Should I sublet them?
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Ltfire
Posted 7/16/2011 19:46 (#1866174 - in reply to #1865966)
Subject: RE: Won't be able to come anywhere near filling rented bins. Should I sublet them?



North Central Iowa

History here shows that prices are likely to be higher in the spring than they are around harvest.  You are already anticipating a short crop on your farm.  How many other farms are going to have a smaller than average crop and how long will it take the market and USDA to realize this?  If the crop is smaller than needed, what is likely to happen to the price?

Personally, I wouldn't care to bet that prices will be lower in the spring than they will be at harvest.  If you're determined, I'd try and buy out the spring contract at the time that I sold the bushels that were intended to fill it.  If you sell this fall and corn goes up a bunch, you'll be out a lot more than the $0.10/ bu you paid for storage.  Why not consider storing the corn you've contracted and trying to sublet the rest of the bins?  It sounds like you could fit your 4000 bushels in one bin and still have 2 bins available.  Have you talked to your landlord?  I would not be keen on having my bins sublet out, although I have let a guy out of a bin rental agreement when I found another renter for the bin he didn't need.

A lot will also depend on your financial situation regarding risk.  For most of the farmers on this board (and I put myself in this group even though I'm sure that I have one of the smaller operations), 4000 bushels would be a small enough quantity to make a larger risk more acceptable.  After all, if you're off by $1/ bu that's a $4000 mistake, which stinks but certainly isn't the biggest mistake most of us have made.  On the other hand, when I first started out, that would have been a lot more of a problem.  Can you afford to have the market move a couple bucks the wrong direction for you and still swallow the loss?  If not, that $1500 (or less) worth of storage is pretty cheap, considering you've already paid it.

By the way, you're getting a pretty good deal if you paid $0.10 bu and apparently less for some of the bins, if they have floors, decent unload augers, and aeration fans.  Is the electric included? 

Good luck,

Mike



Edited by Ltfire 7/21/2011 11:44
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