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Educate me on grain elevators
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Illinois Steve
Posted 2/20/2021 11:31 (#8846594 - in reply to #8846291)
Subject: RE: Educate me on grain elevators

North Central Illinois
Elevators do make money selling basis and the carry. We know what markets did starting in harvest and beyond right? Futures prices rose and basis levels narrowed which never happens at harvest or just after. With rising futures and a narrowing basis along with the market being inverted it was extremely attractive for farmers to sell off the combine this year or shortly thereafter. How much money do you think elevators made off of that deal? Not much. Yes they make money off of drying. They had better or they will never be able to afford to upgrade drying equipment. They also make money off of storage which again they had better or they will not be able to ever upgrade or increase storage. Yes, they sometimes make pretty good money off of shrink and other times it is about a wash. There are a lot of poorly run elevators and apparently there are some who take advantage of customers. Most of them however do a pretty nice job and try to serve their patrons as best as they can. I would encourage you to sit on an elevator board sometime and see exactly how they make or don't make money. Learning exactly how they try to profit off of buying grain from you is kind of an eye opener. It ain't as easy as it looks sometimes.
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