2016/17 milling wheat premiums
- Thread starter JCfarmer
- Start date
- Location
- Cambs Essex
Herd the same £15 for group ones next harvest and £7 for group three
Grains Guru
Member
- Location
- England
These min premium contracts sound good, too good. Milling wheat SnD is going to be heavy again next year so locking into a min premium is a sensible idea. You could easily see £10 or lower premiums for G1's again (assuming we have a good quality crop) and if we don't then you net all the upside anyway.
Just a few things to watch out for though; These merchants doing the Min contracts have really caught a cold this year and taken a hammering on them. I have heard of some who have tried to get out of these buyback contracts by claiming 'grain is not full spec (when protein is 12.6 etc)' and attempting to rip the min 20, 25 contracts up. Also, another trick is they will try and hammer the feed base down. I have heard plenty of stories this year of the companies with the high min milling wheat contracts giving feed base prices £2 to £4 below the market price.
To get around this try and ask for a futures less deal so you can establish your basis price ex-farm in your area or a min premium over futures ex-farm in your local area. That way everyone knows where they are.
None of these milling wheat buyback contracts are backed by the millers so all the companies doing them are taking all of the risk on them which is why when the market goes against them you will hear every excuse under the sun.
Just a few things to watch out for though; These merchants doing the Min contracts have really caught a cold this year and taken a hammering on them. I have heard of some who have tried to get out of these buyback contracts by claiming 'grain is not full spec (when protein is 12.6 etc)' and attempting to rip the min 20, 25 contracts up. Also, another trick is they will try and hammer the feed base down. I have heard plenty of stories this year of the companies with the high min milling wheat contracts giving feed base prices £2 to £4 below the market price.
To get around this try and ask for a futures less deal so you can establish your basis price ex-farm in your area or a min premium over futures ex-farm in your local area. That way everyone knows where they are.
None of these milling wheat buyback contracts are backed by the millers so all the companies doing them are taking all of the risk on them which is why when the market goes against them you will hear every excuse under the sun.
Care to name any names?
Dont ADM offer a min premium contract? Last thing I heard they were quite into milling.
Grains Guru
Member
- Location
- England
Yes I have heard ADM Direct offer min premium contracts but I don't think ADM Direct Ltd own or operate any mills. ADM Milling Ltd own and operate the flour mills. They are two very different and separate trading units.
I think you are confusing ADM Direct Ltd with ADM Milling Ltd, two very different companies and you also assume that all parts of a major global trading corporation want to do the same thing.
The merchant arm in the UK and the milling division have to compete on two very different playing fields.
But I guess you'll know much more than me about all of this...
I think you are confusing ADM Direct Ltd with ADM Milling Ltd, two very different companies and you also assume that all parts of a major global trading corporation want to do the same thing.
The merchant arm in the UK and the milling division have to compete on two very different playing fields.
But I guess you'll know much more than me about all of this...
Grains Guru
Member
- Location
- England
I could do but what's the point?
I think these contracts are good for farmers and they want booking but growers need to be aware of all the terms and potential pitfalls. If you get water tight terms on them and they are non defaultable these are fantastic contracts for a grower that do little for the buyer so when they go wrong you need to have the detail and understanding of the terms clear so the grower won't get screwed because any ambiguity around terms will generally mean the grower ends up with less than he or she thought they would - if the markets go against the buyer.
Richard Budd
Member
- Location
- Kent
Couple of weeks ago managed to secure a min £20 max £35 group 1 milling premium contract - terms and conditions understood, I can not see premiums being much more that this year with the amount of Crusoe, Skyfall and Trinity in the ground, so a complete no brainer to me!
Doubt it. All I know is that so far all contracts I have ever had with a grain merchant have been honoured by both parties, and I dont think it is really helpful to insinuate that certain companies have tried to wiggle out of contracts if you dont want to give any details, or that there are no end-user backing.
I have no idea on what llt company takes what risk. ADM Direct hold themselves out as a division of ADM UK, and regardless of their legal position I find it hard to believe that doesnt constitute being "backed" by an end user. Similar with the Openfield / Warburtons contract. Here is the ADM Direct strapline I lifted from their website 5 mins ago:
"ADM Direct
Through the ADM Direct division of Archer Daniels Midland (UK) Limited, farmers in the UK have the opportunity to build a mutually beneficial business partnership with ADM by selling rapeseed and wheat directly to the processor. "
Anyway, I'm sure there are folk here that will clarify it.
For those who want one, there are still min-max deals about.
Grains Guru
Member
- Location
- England
A great deal Richard !
Richard Budd
Member
- Location
- Kent
I thought so, just waiting for a rise in the 16-17 base price and we might even achieve the heady heights of £145-150 inc. premium for milling wheat as a start for next season which would not be the worst!
Grains Guru
Member
- Location
- England
Static, you're entitled to your opinion just the same as me. Let's just say that I know stuff about companies in the trade who have acted poorly on the min premium / buyback contract promises that you don't. Just accept that. I'm not going to argue the toss with you and I'm really glad that you've had great experiences in all your dealings.
It seems that you've missed my main point, which is that these Min Premium buyback contracts are great deals for growers and they should not be missed, just make sure you nail down the terms with 100% clarity so all know where they stand because the day there is a problem or the companies who bought them are losing cash then there is no room for arguments.
It seems that you've missed my main point, which is that these Min Premium buyback contracts are great deals for growers and they should not be missed, just make sure you nail down the terms with 100% clarity so all know where they stand because the day there is a problem or the companies who bought them are losing cash then there is no room for arguments.
- Location
- West Suffolk
Anyone thought about setting the feedbase price too?
have a min £20 no max for harvest 2017 no hope of a min £25 thins year
you have to take these contacts early
much less than £20 and i wouldn't bother with milling - and sures I'm not alone, extra N and segregation of storage etc not worth it
if £15 is all thats availbe for 2018 i will grow all feed
you have to take these contacts early
much less than £20 and i wouldn't bother with milling - and sures I'm not alone, extra N and segregation of storage etc not worth it
if £15 is all thats availbe for 2018 i will grow all feed
have to agree that for milling wheat there is no one better to deal with than ADM direct - never had a problem with a contract that wasn't for a very good reason
I'm growing increasingly bored of other merchants messing about though
shakerator
Member
- Location
- LINCS
@Grains Guru what is a current realistic feed base for mid lincs, and current GP 1 prem please?
Grain Buyer
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- Location
- Omnipresent
all this alluded "sharp practice" but never any names mentioned or both sides considered. As I've said in past posts I've worked for three international merchants over a 20 year period and have never witnessed any such actions.
Sorry, but I disagree with almost everything in this post, and are not quite sure who you think you are to make such claims?
12.6% wheat isn't full spec. The contract is for 13%, and so merchants do have a right to cancel the contract if the grain isnt good enough. Obviously at 12.9 %this would lead to a lot of bad feeling between farmer and merchant, so what normally happens is that the merchant takes down to 12.5%, which is what the mills will take down to on a claim, below that if the mills wont take the wheat so obviously the contract is cancelled. Seems fair enough to me?
The feed base is different to 'normal' feed wheat, yes. It is across ALL merchants who run these contracts, simply because if you are on a £6 haul to a feed mill and a £10 to a flour mill the merchant has to take the extra haul into account. From memory ADM get round this by offering a Min15 or Min20 depending on distance from the mill - they adjust the premium rather than the feed base, but the net effect is still the same. Any deal basis futures will just offer a lower price vs the futures benchmark - just makes it more transparent and less arguments when it comes to pricing. You wont get the same basis for feed wheat vs milling in most parts of the country though.
And finally, if the tonnage is backed off with a miller or not, that is the merchants problem not the farmers, and dont really see why it is relevant. Some years the millers do more min contracts to the trade, some years they do less, but most/all millers do offer them or have in the past.
So, considering you advertise yourself as a self proclaimed 'Guru' I suggest you get your facts right before talking a load of rubbish.