Buy a futures position instead if you think the price will rise @warksfarmer Just put some extra cash in the futures account to cover margin calls in case the price moves against you.
The perfect storm
- Thread starter warksfarmer
- Start date
Buy a futures position instead if you think the price will rise @warksfarmer Just put some extra cash in the futures account to cover margin calls in case the price moves against you.
- Location
- Montgomeryshire
You don’t run a business do you?
I would guess there wouldn’t be many farms that are in such a comfortable position that they could afford to farm for 18 months without sales, whatever they thought might happen to price.
- Location
- Cirencester
RT assured obviously!!!! Utter con AIC
We should get Minette Bathead on , seeing as @Guy Smith has absconded .
- Location
- Spilsby Lincolnshire
Cashflow is king!!!You don’t run a business do you?
I would guess there wouldn’t be many farms that are in such a comfortable position that they could afford to farm for 18 months without sales, whatever they thought might happen to price.
No it isn't , profit is king .
- Location
- S. Staffs
So in fact you agree with me .
If you're under capitalised you're rowing against the stream from the start .
grain is the ultimate (and original) currency
you can borrow against a heap of grain as its gold standard security for a lender …… unlike asking to borrow to buy futures which is simply a gamble that no good lender would want to support
cashflow is king in any business but it’s dangerous to allow it to drive sub optimal decisions that compromise profit, ultimately it’s profit we run business for
you can borrow against a heap of grain as its gold standard security for a lender …… unlike asking to borrow to buy futures which is simply a gamble that no good lender would want to support
cashflow is king in any business but it’s dangerous to allow it to drive sub optimal decisions that compromise profit, ultimately it’s profit we run business for
wanton dwarf
Member
Difficult for a businessman to fail if they are making a profit.
Everyone will fail if they are not making a profit.
ollie989898
Member
You don’t run a business do you?
I would guess there wouldn’t be many farms that are in such a comfortable position that they could afford to farm for 18 months without sales, whatever they thought might happen to price.
You illustrate some quite typical risk-averse thinking- money has been literally dirt cheap to borrow for ages and yet you would let this irrational fear of borrowing put you off from netting you £50/tonne premium?
Who is saying a business should forego any sales for 18 months by the way?
ollie989898
Member
And yet capital is literally dirt cheap to borrow but people would sooner do short of it or avoid borrowing making them unable to re-orientate their business to suit opportunities that present themselves?
- Location
- Hampshire
Think the vegans will make the most of the tragic continental floods to get us all eating over-processed carbohydrate crap, blaming livestock farming, fire up the Clarkson!!
- Location
- Montgomeryshire
if you hold your harvest until the following year, you presumably won’t be selling it.
Most farms will already have borrowings given this ‘cheap money’, especially those that would be likely to take a wild punt on a £50/t increase in their held harvest stocks.
I suspect it would be a hard sell to a bank manager, when trying to borrow money against a hunch that prices might rise by more than the cost of storing it for a year, as well as the cost of sticking another corn store up to hold it in most cases.
Hilly
Member
- Location
- Scottish Borders.
Proffit is king , cash flow can be managed.
fieldfarmer
Member
Yep, he's right, you don't run your own business.
i was told years ago cash flow is vani
ty profit is sanity!
ollie989898
Member
I see, and this discounts me from any such discussion.
ollie989898
Member
if you hold your harvest until the following year, you presumably won’t be selling it.
Most farms will already have borrowings given this ‘cheap money’, especially those that would be likely to take a wild punt on a £50/t increase in their held harvest stocks.
I suspect it would be a hard sell to a bank manager, when trying to borrow money against a hunch that prices might rise by more than the cost of storing it for a year, as well as the cost of sticking another corn store up to hold it in most cases.
Again, I don't recall anyone suggesting storing ones entire harvest for months on end, though there is no law that says you cannot, of course.
'Most farms will already have borrowings'. A lot of businesses, if not all businesses have borrowings. What is your point?
But the thing is, if people were entirely 100% risk averse then, no one would ever dare to use borrowed capital, from any source, to store anything; certainly if grain was uneconomic to store long term then everyone would be flogging it at harvest, much less slurry, silage or any one of a number of other materials of even lower value and possibly even more dubious economics?
A hard sell to a bank manager, it may well be. I don't know. I bet there are farms out there who have significant storage capacities though, I used to know a man who would readily over year a fair tonnage of stuff though I don't know how he financed it or even what his original thinking was for having such storage in the first place.
There will be businesses of all kinds investing money into all kinds of projects with the intention of streamlining their operation, increasing output, improving margin or marketing potentials and heaven knows what. I guess investors or lenders in such examples would want to see a proper business plan, a detailed set of accounts and demonstrable affordability.
fieldfarmer
Member
No discuss away, but maybe lay of the preaching about taking risks, moneys cheap borrow some more it just an "irration" until you have.