What are those fancy grain contracts being offered in Western Canada?

[00:00:22] Speaker A: All right, everybody, welcome to episode number 23 of the what the Futures podcast. I hope you're having an outstanding day or weekend whenever you're tuning into the show. I hope it's a great one for you. Of course, the what the Futures podcast is recorded in the UPL studio, and I am recording this on Thursday right before the day before the SJHL playoffs. Continue with Flynn Flan Flynn Flan Bombers and the Melfort Mustangs playing in the final, final series here. Getting underway and what a series or, sorry, a journey it's been for Melford to get to these, to these finals. I think four games went into overtime against the Humboldt Broncos. I think there was even a double and triple overtime. So a lot of hockey for those Melfort Mustangs. So they kick off here on Friday, April 19. Of course, UPL, a proud sponsor of the SJHL playoffs. The what the Futures podcast is your weekly dose of clarity in the complex world of agriculture. Now, today's episode, there's some clarity here, but there's also, there's going to be a rant in here as well, so stay tuned for that. Of course, I'm your host, Ryan Denny. I've spent my career working with farmers in western Canada as a grain marketing advisor, a consultant. I was a grain buyer way back in the day as well. And I'm taking my knowledge, expertise, learning lessons from the past and bringing them to you here on the what the Futures podcast. I do want to start off with just a quick apology for last week's sound quality. It is not editor Jeff that was the problem. It was my two co hosts. You may have noticed them in the background, boots and mittens. They live in the studio, and I didn't realize that they went after the microphone cord. They have gone after every cord in the studio. And so I've done some replacing and hopefully that does the trick here for this week. I've also got my new lights set up, still working on positioning and all that good stuff. But the studio is coming to life here. The new camera, I couldn't get it quite functioning today, but we're getting there, folks. We're getting there. So this week I got a few different things here I want to talk about crop marketing in the spring. I've got Angie Setzer joining me from consis AG. She's out of Michigan. And you're going to say, well, Angie, why is Angie, Angie joining the show from Michigan? Well, we're going to talk about accumulators. We're going to talk about some of these fancy contracts out there that originators, or more commonly known in western Canada, grain buyers, they use these contracts to play on your emotions here just a little bit. So we're going to have a discussion about that and a couple of watch outs. Now, I will say with the conversation with Angie, this was not advice or a strategy for you to look at and execute on. Of course, trading futures and options should be done with a licensed broker and an expert. And so we're not trying to give any advice here. We just want you to watch out for what's going on in some of these contracts across the prairie provinces already. Of course, we'll get to our regular segments, including the popular mailbag segment, where I'm going to turn the tables here and ask you a question, because the mailbag was empty this week. So I got something for you. And I also wanted just to get this out of the way nice and early in the episode. I don't want it to get buried, you know, too far along. But if you go to a company called Egg Finity and you go to their website, there's three words that pop up right away. Value, relationships and innovation and egg finity. I hope you're tuning in because shame on you. This is an open invitation to come join the show and tell us exactly what is going on. Because from what I can see again on social media, Facebook groups, Saskatchewan farmers, Alberta farmers, Twitter, you still have the same issues that you had last year, last fall. You've sent me some emails. We've, we've had some communication. I appreciate that. But shame on you because there's folks out here that think they're going to get paid on a certain day, and then they get a phone call saying, apologies, you're not getting paid today, as per the terms and conditions of your contract. Instead, we will contact you in three weeks or whatever. Okay? So shame on you. Come on the show, let's talk about it. And honestly, just change your terms and conditions. This is about communication. This is about being upfront about, you know, situations going on. I know everyone's been paid so far to date, which is great, and we, you know, certainly appreciate that side of it, but something is going on here and just talk about it. Change your terms and conditions at the very least so that people know when they're going to get paid for the grain that they are selling to you. Okay? So shame on you. All right, now, tough transition out of that one, folks, but let's switch gears here. Let's get to some positivity in a moment before we get to the positivity, though, I do want to just point out something pretty cool that John Deere released. Of course. John Deere is a sponsor of the what? The Futures podcast. We appreciate your sponsorship. They are looking for a chief tractor officer. This is a new role with John Deere. And you may have seen the Brock Purdy commercial or maybe you saw it on, on TikTok or Instagram. He's a quarterback for the San Francisco 49 ers. Division rival to my cardinals, I should say. But they are looking for someone to create face melting social media content for John Deere. And they want you to create a compelling video and submit it by April 29. Once you submit it, you can also share it on social media and take John Deere. They're looking for someone to join their team as chief tractor officer in charge of social media. Of course, you can also go to John Deere, CA, check out all the new stuff. New combines, new tractors. I saw some of these new chapters were rolling through across the prairies here over the last week or so. So go to John Deere, CA and check out all that cool stuff as well. Of course, folks, we, we like to get to our positive moments nice and early in the episode as well. So let's go to positive moments. And I've got a couple here for, for this week. One's a little bit of a repetition or another comment from a couple weeks ago, but we did receive another moisture event for the fall farm. And you say, well, Ryan, this is normal, right? Like it's spring. You're getting moisture. You know, who cares? But what I'll say is this moisture, it's just, it's very much welcome. You know, bring it on. It's appreciated. Mother nature. Continue. Uh, you know, bringing moisture. I know not everyone's getting, um, the much needed moisture that they need quite yet. Uh, but for our farm, you know, six to eight inches of snow, I know the haters out there will say, well, it's just the snow. There's no moisture and snow or very little, but it's going to soak in, folks. It's going to get us a nice, a nice little moisture profile here to get planted. So I'm excited about that. And then the other thing, it's actually happening here in just a few hours after recording. But I'm doing a little spring kickoff party with the fellas are coming over and we're going to start a new trend here tonight. So we have the Milwaukee tool rep that's yak of all trades. That's, that's my guy for Milwaukee tools. He's gonna pop by as well. And, you know, like a Tupperware party or, you know, I think back in the day, it was like a. Was a candlelight party, maybe I can't remember what they were all called, but my mom hosted many of these parties throughout the years. And so I'm. I think we're gonna start a trend here. The Milwaukee tool party, or tool party. I don't know what to call it yet, but the fellows are popping by later tonight, and we're going to have some fun, have some bevies, and kick off the spring planting season here in the Edmonton region. All right, folks, now, my hot topic for this week is it's something that's kind of been brought up multiple times here by the professionals in the space over the last couple of months. But it's. It's. It's going to circle back to spring marketing. Crop marketing in the spring is what's going to circle back to. But there's a bit of a pattern here. If you look back a decade ago and you look at the charts. So if you're. If you have an opportunity, I know you're busy, but if you have an opportunity, you can go back and look at, like, a 2010 canola chart, 20, 1112, 1314, and then go to 2020, 202-122-2324, take a look at those and see how similar they are. You got 2020 is the bull market kind of comes to life. You have that rally that starts in 2021. It gains momentum. All right, nice, strong bull market. And then in 2022, it peaks. So your bull market hits its top. And then in 2023, you have the aggressive sell off. If you go back to 20 10, 20 11, 20 12, 20 13, you're. You're gonna see some similarities there. It's not perfect, but you're gonna see some similarities in 2013. 2023 is the aggressive sell off. Okay, so you're gonna say, well, Ryan. Well, what's all this? What's this mean for 2024? Well, 2024, if you look back at 2014, it was a transition year. So my meaning to that would say that values were still higher than when you go into 15, 1617. They were still higher in 2014. So 2024, I believe we're seeing a similar thing where prices are a little bit higher here than what we'll see in the next couple years. And that there was pricing opportunities in 2024. I'm thinking you got pricing opportunities to help you out for 2025 as well. And that's something similar that what you saw back in 2014 and into 2015 now 15, 1617, 1819, those were not the most exciting crop marketing years. A lot of tight trading, not all. Again, there's rallies and there's declines in futures, of course. But, you know, there wasn't any big moves up or down in those years. And so I tie this all into your spring crop marketing plan, because I had a conversation with a grower the other day about crop marketing. And folks, remember to seek the advice of a professional. But, you know, I, we were talking about crop marketing and different trends, and I said, well, you know, as a, as an advisor, if you're sitting there as an advisor or giving advice to a, to farmers, you're, you're going to try to figure out how to convince them to be aggressive this spring and this summer. And maybe you were already aggressive a couple weeks ago in that canola rally. Maybe you did some new crop out there. But, you know, how can I convince you to be aggressive? And then also, what can I do to help you make grain marketing decisions? What can I do to give you the confidence to make the sale? And again, folks, I'm not good at predicting markets moving forward, but if you look back at what happened in 2014, in fact, the chart shows me that we did peak in the spring months, that year, in 2014, looking at canola specifically. So we did peak in the spring months, and then we made a harvest low as well. And I think from the high to the low, I don't have it exactly in front of me, but it might have been $100 or $120 a ton or something like that. It was, it's quite significant, though. Whatever that number was, it was significant. It did pay dividends to price that grain in the spring and to avoid that fall and into that early part of winter marketing plan or trend, it did pay to forward contract. It did pay to forward contract some of that crop for the next year as well. And so I, I look at the setup here of these markets. I look at, uh, you know, the wheat market not giving us a whole bunch of life yet. The canola market showing signs of life the last, you know, couple weeks ago, we got lots of weather in front of us. We've got a whole growing season in front of us that's going to dictate price direction. But, but don't lose focus on how important April, May, June, and even the early, early part of July, how important that is for your crop marketing plan. And, you know, Angie's going to talk about it here in a second as well. But you know, to have those targets in place. You know, have those targets in place, that's kind of like step one right now. And I know a lot of folks say, well, Ryan, if you show them a target, grain buyer target, then, you know, you're. You're. You're showing them your cards a little bit. In a bullish market, I'd say, fine, you know, I don't like targets in a bullish market. But we're not in a bullish market anymore. We're in a bearish market. And we hope to take advantage of seasonal rallies, seasonal trends, seasonal patterns. We hope that there's enough of a weather scare here to rally markets in the spring so we can sell them. Um, so targets, to me, make plenty of sense here at this time. But my hot topic is do not lose focus on how important this time of year is for your crop marketing plan. Hopefully, you have some time to sit down and review your plan, review your strategy. It should involve price levels, it should involve dates, it should involve your break even points. It should involve cash flow. It should involve bin space and logistics for fall, logistics for winter. I know I'm missing other things, folks. I didn't write it all down before hitting the record button, but it's a very important timing of your marketing plan. And I hope they can sit down and. And just highlight that for yourself so that when you're busy, you're planting a crop, busy working on equipment, you know, when the phone rings, when you see an opportunity, you can execute. Okay. All right, folks. Uh, great guests this week. We're going to switch gears now to Angie Setzer and, uh, decades of experience. Uh, we go on for a little longer than normal, uh, but Angie has a lot of good points to cover off here. And, uh, I hope you appreciate the discussion. So here is Angie Setzer. Alrighty, folks, I've got Angie Setser joining me from Consys Egg Consulting. Angie, how is your day going? [00:15:55] Speaker B: Oh, it's going great. Uh, no complaints other than the markets, but I think I'm among friends when I say that, so. [00:16:01] Speaker A: Oh, yeah, 100%. You know, it's been going. These markets have been brutal for so long now. Like, 2023 was absolutely brutal, especially up here in some of these canadian markets as well. And, yeah, I'm looking forward to some type of optimism one day. But, yeah, we'll see if we can get any of that in today's conversation. Um, angie, so I feel like I know you because I've been following you on. On Twitter and on x for. For so long. But why don't you give listeners here in western Canada a little bit of your background and your story on how you got here today. [00:16:37] Speaker B: Yeah. So, um. So I'm working on this. This is my 20th growing season, which is absolutely mind blowing to me. I started in 2005. So for those of you who are young whippersnappers tuning in today, that was pre rfs, like pre ethanol. You know, when I started trading, we didn't have an ethanol plant in the state yet. I think we were just about a few months away from starting to plan one, you know, and so I'm one of them old people that's like, gather around. Let me tell you, when we didn't have an extra 5 billion bushel of corn demand, you know what it looked like? But I grew up on a farm, so I grew up on a cash crop farm in central Michigan. Potato farm, mainly. We, when I was younger, I was really close with my grandpa. My grandpa was on the farm, obviously, and was a huge proponent of eggs in different baskets. So we had corn, dry beans, pickles, peas. Like, we were right south of a Gerber baby food plant. So you basically just grew about anything. We had some cattle, did a little bit of dairy and all that stuff. But I actually grew up in an area that wasn't. It was like they weren't proud of their agricultural background. Right. We didn't have ffa. You know, it was kind of a joke in our school about being a farmer or something like that. And so I went off to college like most every young female did. And the earls ends with the intent of becoming a teacher. Right? Like, I was gonna. I was gonna teach. That was what I was gonna do. [00:18:07] Speaker A: Yeah. [00:18:08] Speaker B: And that didn't. It just. I looked around halfway through my sophomore year and was like, I'm not gonna get a job in this. Like, there's so many people ahead of me, there's so many people behind me. They're already really tight, and, you know. So we kind of solved the teacher shortage around the time I was ready to graduate college. So I just figured I'd graduate with an english degree and see what happens. Whoa. Really not smart on my part, but I guess when you're in your early twenties, you'll figure it out. And so I got into sales for a short period of time, discovered that I actually, I liked that. Saw an ad in the paper for a position outside sales position, agricultural experience preferred. Right? And I said, okay, well, I can sell things. And I grew up on a farm. I joke they hired me because I was willing to work for $7.50 an hour. I had no idea what I was doing. I started brokering cash like that was. My boss handed me the password to the grain accounting system that they had with all the customers names on it and said, tell them you'll pay them $1.80 a bushel for corn picked up and see what happens. So my first week, everyone said, honey, no, I'm not selling you any corn, but if it gets to two and a quarter, you give me a call and I'll sell you everything in the bin. So that was the first year I learned that farmers lie, because that's not what they mean. They tell you that, they say they'll sell. It all didn't happen, eh? No, but so, you know, over the years, I kind of discovered that, you know, here in the state of Michigan especially, like, we had incentivized farmers putting bins up very early on in agriculture around here, we're a peninsula, you know, we really don't have a huge amount of demand. We didn't, and we still kind of don't, but, you know, we didn't have the ethanol demand. We just had feeders, and you had rail to rail the crop out of the state, and that's what you sold into. And so it didn't take farmers long to kind of recognize that that harvest basis tended to improve as they got out forward, you know, further beyond. And so I have customers that, you know, they'll tell you about their grandpa putting up grain bins in the early seventies. And so I'm sure everywhere around the country someone will tell you that. But for some reason, Michigan, even in 2005, we just had a lot of on farm storage. And I quickly discovered that farmers really didn't know all of the ways that elevator people were taught to trade grain. You know, I'd learned how to become a basis trader. I learned what spreads would usually do. I learned seasonality and some of these other things and started teaching that to my growers, using htas, you know, hedge to arrive contracts and working to negotiate basis later and stuff like that. And so in the course of my first six years, we built the business, you know, basically went from a million bushel to just over three and really kind of ran out of the ability, you know, it was 2011, the markets were moving all over the place, growth was getting difficult, and I had someone approach me and say, hey, would you like to come down and manage our grain position? Like, we've got five elevator locations. Like, we need a merchandiser. Would you like to join us. And I said, sure, because I had no idea what I was getting into, and I was young and stupid, and so I went and decided to run a physical book. And so, yeah, I spent ten years there managing five elevator locations, and then I brought my direct ship business with me, and so I actually worked to build that. And then the ten years that I was at the elevator, we went from about three and a half million bushels worth of handling to about 15 million the year that I left, and just really kind of built up a cool position. Long story or short story? Long, basically, fast forward to July of 2021. I just got tired of trying to work on the margin for the elevator. Costs keep going up. It's so much more expensive to have the physical space. And I just kind of felt like I was going to start to damage relationships by being able to cover these additional costs with basis or margin or whatever. And so I said to my growers, hey, if I start doing the things for you that I've been doing, but instead I'm doing it direct, like, I'm a merchandiser for hire, would you be game? And so here we are, three years later. I've got 50 customers across the state, and I'm actually representing more bushels now than what I was trading when I left the elevator in 21. Sorry, that was like, the entire podcast is my history now. So we have time for. [00:22:53] Speaker A: Yeah, a few more minutes. [00:22:56] Speaker B: No problem. [00:22:58] Speaker A: No, that's great. That's a great perspective, and I appreciate your background there and the story. We're in Canada. We have some similarities here to Michigan because we also have a lot of storage. Storage is just something that been part of the conversation. We have to rail everything out as well. And, yeah, put it on, on a vessel, um, out of Vancouver or, or heading out east or, or south, but, um, is there any, like, little merchant merchandising tip or secret out there? Like, one thing that stands out if you have a lot of, uh, storage and bin space, is there like, something that people don't recognize or realize just one little thing there? [00:23:48] Speaker B: Oh, I would say the biggest thing is everything's negotiable. I feel like, you know, especially as we see the, the growth in, on farm storage or, you know, you see the farmer kind of take control of the, the inventory after harvest. You know, there's a certain level of power that folks have when they have the supply in many markets. And, and so that's kind of one of those things to me where you can always ask, don't be a jerk. And, like, ask for things that are well beyond the scope of normal. But, like, you want to dime a push or you want to negotiate some averages on grades or whatever that may be. Most everything is negotiable. And so I feel like sometimes we don't give farmers that, that information. [00:24:39] Speaker A: Yeah, no, that's a great one. The, you know, farmers are, they're very polite, I find, and nobody likes tension. You know, a farmer or non farmer, you don't like tension, but farmers are great negotiators as well, so it's like in their wheelhouse to, to negotiate. So it. This is perfect. Yeah. [00:25:00] Speaker B: Yeah. Can I add one more, though? Just because you aren't writing a check doesn't mean it doesn't cost you anything. So there's two of them. It's always negotiable. But definitely make sure just because you aren't writing the check doesn't mean it doesn't cost you. Be aware of those intrinsic costs that you don't. Yeah, that don't add up quick, but. Sorry, we can go back to that. Everything's negotiable. It's hard to choose one. [00:25:23] Speaker A: Well, that's why I thought I'd throw one out there and happen. Right. So. Okay, now just give me a little snapshot and, like, your day to day. Then, like, what's your day look like? What are you working on? [00:25:35] Speaker B: Oh, golly. [00:25:37] Speaker A: Yeah. [00:25:37] Speaker B: Yeah. So I'm usually up about 3315, 330 every day. I don't know why, but that's when the sleep stops. So I just get up. Then most of the time the scaries start to creep in about 230 where it's like, have you, did you book the basis on these bushels? Or, you know what I mean? Like, Joe hasn't sold enough decor has been, what do I got to call him in the morning? Kind of deal. But usually up in atom, I like to get a grasp on what's going on overnight. And so I'm going to blame the fact that I can't sleep through a whole night anymore on the Russia Ukraine situation. But pretty much since late February of 22, my brain at about 03:00 a.m. Is like, you should probably check and see what's going on. And so like to catch up, you know, Asia, european news, with the different things that are going on in the overnights that could have influence. What the heck Russia and Ukraine are up to. You know, those types of things, the big geopolitical macro situations. I write morning commentary every day, so I take those into consideration, and I like to have my morning commentary out by about 08:00 eastern every day. And, you know, that really focuses more on what's going on in the cash market, what's happening in the macro space, geopolitical developments. Like, I'm really not one to focus hard on. Yesterday's export inspections said we ships 230,000 metric ton to the Philippines. Like, I don't care. Like, are we on track or not? Yeah. So. So I'll do the morning content and take my son to school. And then the second part of my day starts every morning about nine. And really, I am like one of those, you know, like a dandelion that gets blown in the wind most days. Like, if I have anything that is absolutely hard, a hard stop, it goes on the calendar, you know, and then that's a space that's set aside. But beyond that, I just kind of follow what I need to follow in a daily basis, which has been my entire life. You know, I start a day with a plan, and that might be okay. Today we're going to look to make sure that these five customers get target orders in place or something like that. But because I deal with the physical space. On Monday, I had this plan, but by the end of the day, I was dealing with rejected loads because we had vomitoxin and some weed issues. It still might go sideways, but the bulk of my job is really working with my growers to assess where their risk lies. And so, like, the last few months, it's been old crop basis for us. You know, here in the state, you know, we're struggling. We've had several record crops in a row, so is Ontario. So, you know, we in Michigan used to be able to ship a bunch of corn east into Ontario, you know, and kind of let that be our pressure release valve. In years now, granted, for the bulk of my career, we haven't had a dollar trading near 106. You know, like, so the dollar, the currency is a lot different. It just doesn't make the trade happen anymore. That Ontario basis is more garbage than what ours has said, with respect, but it's all garbage. And so the last few months here, I've been really working on assessing what is it that you need to move at what points in time, and just kind of letting folks know, all right, your biggest risk lies in basis. We've been waiting for futures market, the futures market, to do something. Uh, and, uh, that's just not been great. So other days, it's just kind of conversations about what is going on fundamentally. You know, what am I watching? What do I expect to see happen in the market, um, you know, and then just kind of taking care of all of the things that you have to take care of it to, to make sure that each customer has what they need, you know, kind of set up or sold or orders in place and, and just kind of, I don't know, connecting the dots each day, I guess, is the best way to put it. [00:29:48] Speaker A: So, you know, 50 growers, I think you mentioned. And are we talking about multiple delivery points, multiple companies involved? You're kind of the mastermind behind all, everything going on? Yeah. Okay. [00:30:04] Speaker B: Yeah, yeah. So, yeah, all over the state. You know, basically I can use my map and we go from what, this tip to down, you know, and I've got some, a couple in northern Indiana that I work with, you know, and a handful of other folks that I just help build marketing plans. I really feel guilty I don't provide them the level of service that I do my Michigan growers. So it always makes me feel bad. Cause I'm like, I don't know, I don't want to pretend that I know the basis in central Illinois well enough to, you know, because I've spent 20 years learning the ins and outs of the Michigan market. And so, yeah, you need to figure out where you can take a rejected load of millet or something. Absolutely stupid. I probably know a mill somewhere that we can connect you with to solve your problem. [00:30:50] Speaker A: Yeah. Okay, cool. So back, this kind of ties in, but back on March 21, I saw on X, formally known as Twitter, but you had a little bit of a warning that went out to your followers about accumulators and bonus contracts, or bonus, they're called different things at times. [00:31:15] Speaker B: All kinds of different things. Yeah. [00:31:18] Speaker A: And what caught my attention was that in Canada, western Canada, we don't really talk about accumulators, but there was one company, uh, one grain buying company, that every message that was going out had call us to, to talk about an accumulator. And, um, so I kept seeing that. Now I've seen your warning. Uh, why would you put a warning out there about accumulators? What, what is it? [00:31:47] Speaker B: So an accumulator contract is one where you basically commit a certain amount of bushels, and in that, tied to it is a short call, you know? And so, for instance, right now, futures are trading at 460 on the december board. Folks are pretty desperate, right? They'd probably give their pinky nail for a $5 contract. And so basically what happens is a broker goes out, and I'm going to try to make this as simple as possible. So if I. But you go out and you figure out the options, the strike price that you can sell to add the premium to the current futures price to get it to where it kind of incentivizes a grower to. To want to commit those bushels. And in doing that, when you short a call, you put yourself open to the risk of having to deliver those bushels at that higher value as well. And in every case of an accumulator, they're going to double up. So if you enroll 20,000 bushels at an accumulator currently that you're collecting $5 on, and you have a 550 double up value or whatever, so if the board expires above 550, you have 20,000 also that are committed, that could be sold at 550 between. Well, if the board's above there most of the time at the end of November, the options expiration. What makes up an accumulator is you have a couple different things. You've got your knockout in a lot of market structures. And so what that would mean is if we were at 460 today and you were, you know, kind of pricing corn at five with a double up risk at five or five, whatever that may be, you also stand a chance of if the board were to drop to 430, you're done pricing. So, like, if you are not booking an accumulator without a guaranteed floor in it, you don't have a guaranteed amount of bushels priced either. Now, the good part about the knockout is you don't have to worry about the double up anymore, but you're also knocked out at $4.30 or whatever it may be, having to figure out how to market the rest of those bushels that you had committed. And so to me, like, I want to be clear that there are a lot of ways to use over the counter contracts. And so that's what an accumulator is, basically. It's an option strategy that's attached to the expectation of physical delivery. And so that's, it's just you're selling options, you're buying options, you're trading options, and that's what the OTC market is. And to be completely honest, in many cases, an accumulator, though, if done correctly, like with the floor and at the right price and all of that stuff, an accumulator truly is an origination tool. It is not a risk management tool. It can be used in risk management as a part on 10% of production or something like that, as a way to kind of maybe enhance the price you're receiving or something. But really beyond that, a lot of OTC products are put towards originators as an origination tool to get a conversation going with a farmer. You know, in times of, for lack of a better term, I'm going to say desperation. Like right now, when you're looking at corn in the bin, that's, you know, sub $4 and you it pay, it costs you $5 to grow it, you know, you're pretty much willing to do just about anything to get up closer to that $5 than not. And so, you know, that's where the bonus premium contract comes in. A lot of times a bonus contract will be different than the accumulator in the sense that a bonus is adding that call sale value that you would get for new crop. That's adding it to an old crop futures position. And so now instead of 430 may futures or whatever, you're committing maybe December 480 futures and you're putting $0.40 on your, well, it's not even 40 volatility so low, you're probably getting $0.20 on a bonus premium anymore or something like that. And then that means that you've committed those new crop bushels as well. So not only did the originator get the old crop bought, you slap on the premium gain from shorting that call, but now they have you locked into some sort of contract. Most of the time it's just a commitment contract for those new crop that you will determine futures and basis at a later day. [00:36:10] Speaker A: And so is the commitment, is that where you can also run into a little bit of trouble on that? [00:36:16] Speaker B: Yeah, yeah. And I mean, I have to preface a couple different things. First off, you know, OTC contracts and OTC programs really came out. And so you heard a lot about it here and across a good portion of the corn belt. 2020 was the last time that we had a lot of people really kind of pull, push these. [00:36:38] Speaker A: I was going to say that, yep, it's been a few years. [00:36:41] Speaker B: Yours truly was one of them who got to witness the whole, you know, like, well, if you get doubled up on over 380, you're not going to be sad, right? No, you are. It doesn't matter if it's $3.95 and you're only $0.15 above, you're going to be ticked because you've been hamstrung on those bushels, you know, and so I had some arguments, some not arguments, nice discussions with other merchandisers who are like, well, getting doubled up on it. $5 futures in December 2024 is a very different scenario than getting doubled up on at 380 futures in December 2020. But I would say maybe not. [00:37:26] Speaker A: Maybe not. Because who knows? By the time you get there, it's. [00:37:31] Speaker B: Easy to say right now. And like I said, every customer I talked to in 2020 was like, oh, yeah, if I get doubled up on, I'm not, I'm not going to be mad. And there were some that they weren't lying. I had others that, you know, I was a bad person and I truly thought I was helping. And so that's where I kind of come in with the warning is it's like, listen, as someone who thought they were helping and really kind of working through what was a really sticky situation and kind of helping aid, you know, and I thought we were smart about different things. Like you, a guarantee. So, like, you're going to have a bushel amount. So instead of a knockout limiting you on, you know, like, you, maybe you committed 20 and you get knocked out after only having priced five. You know, you can put a guarantee underneath that to where if you hit 430, everything's priced at 430 or something like that. But, but honestly, I think the biggest thing that I always give a word of caution on is the lack of control that comes from entering into an origination agreement in the OTC side of the business. [00:38:34] Speaker A: Yeah, you're, you're, you're handcuffed at times if you, you want to be marketing during the spring and summer, but you have those bushels out there and especially when it flirts with that yes strike, you're like, what do I do? I can't yeah. Still anymore, but I have to wait this thing out. And so I've got one more thing to add, and I don't know if this is just a canadian specific example, but poor paperwork and poor follow up. [00:39:04] Speaker B: Yes. [00:39:04] Speaker A: Like, I've got stories, Angie. I've, I can't go into a great deal about them because they did lead to some legal actions, but I had known some farmers that, that got, they did a bonus type contract and there was no physical paperwork or signatures that went with it. And they got a surprise phone call to say, hey, remember when you did this a year ago? Now you owe us these, these extra bushels at, I think it was $300 a ton less for canola. Like, it was huge. [00:39:42] Speaker B: It was a huge. [00:39:43] Speaker A: It was in the six figures. It was, it was just gross. With no paperwork. There was nothing even in. There's a whole story. But anyways, the paperwork was poor. [00:39:54] Speaker B: And I've seen elevators put out paperwork on different account. Like I had one last year with a min max, which is a little bit of a different type of OTC, but, you know, same sort of style. Like it's a. It's more of setting a floor and it's exactly what it sounds. You set a floor, but you can only sell it, you know, whatever, but, you know, like you just, you can't. Like you said, you're handcuffed. Like, you just, you. You have to make sure that you're able to kind of work your way through something or trade it properly or if the situation changes. And so especially to be writing them in March or April, you know, when you don't know what your acreage is going to look like, when you don't know what your June weather is going to look like when you don't. Like all of these things can become incredibly punitive. But yeah, you know, on the paperwork side of things, like, I'll see some originator, originators throw them out and you don't even know what the min or Max is on the contract like that. You just. You have no idea. And then I watched another one with a bonus contract that basically missed the high of the market by about a quarter of a cent last summer. But we couldn't do anything with those bushels. We couldn't liquidate the contract and go to the market at 628. We couldn't, you know, do whatever it is that we thought that we needed to. And we didn't have basis locked in either. So basically this bushel commitment turned into a, you know, and I was on top of it. Luckily, they work with someone like me who, you know, not sounded horrible like one of those whatever, boasts, you know, like. But no, I was able to kind of offset some of their basis risk. But had they not been aware of it, you know, they'd have probably had basis booked at one of the lower level what they had. [00:41:36] Speaker A: Yeah, yeah. So it's. And I don't want to pick on the folks that are originating grain here, Canada, but I was one of those person. I was that person. And at one point. And the, the training that they received or that I received back then was, was not very adequate. And so, you know, you just think about it for a second, folks, okay? You've got, you know, someone who's maybe a bit newer to a role, who's being told by somebody else to go and position this. Okay, number two, you've got poor paperwork in many cases, and very poor follow up in a lot of cases. You've got some bushels out there that you, you need to really look at to negotiate or you're handcuffed, trying to figure out what to do with them potentially. And then you got started with all of this because of emotion, because of a price that looked a little bit better and got you excited for a moment. And that's what started this whole journey. So I just, that's why your tweet was important to me. And I know folks might have to rewind here and listen to what an accumulator is a couple of times because it is a little bit of fancier what we're used to, but our grain buyers are out there promoting this stuff. So we have to be, we have to know what we're doing. We have to be, have the knowledge and, you know, tread cautiously. So. All right. [00:43:12] Speaker B: I agree. Yes. [00:43:14] Speaker A: Okay, so that's great stuff. I know we've been going a little bit long here. So just to wrap up, is there anything you're watching in these markets right now that either is something that's getting you excited for a rally or even more nervous or scared of lower prices? [00:43:30] Speaker B: Oh, golly, I know. I'm just kind of watching. I think around the world we're seeing some trend beginning. It was easy for me to think, not say where we are seeing some crop size get trimmed back a little bit like you saw. Argentina's crop is going to come in probably below 50 million metric ton. You know, that's a pretty substantial difference from the 61 millimetric ton we were talking about at the end of January. You know, it's going to be a large crop. South America in, in general, between Brazil and Argentina are still going to be above a year ago. So we're definitely watching what happens with chinese demand. But me personally, I think weather is obviously going to be the biggest factor and the fund short. And so the two of those things coming together, especially if they kind of conjoin force before the farmer selling gets really heavily engaged. You know, we could see a bit of a pop. And so the biggest thing for me right now is just keeping my customers and keeping the folks I'm talking to engaged and getting to where they're putting in target orders. The prices that you wish you would have sold at are the prices that we need to have orders in place at. And it's just that easy. You know, take your crop, break it down into incremental levels. And so if you're as simple as I am, I like 10% easy math. And the thing about breaking your crop into 10% increments and scale selling is if you do it on a 225 cent increment. So if you put your orders 10% of your crop at $0.25 apart, you're gonna catch a $2.50 rally in price. And that's without you adjusting orders, which you're obviously going to make changes in your range if the market is rallying. And so now's the time to get engaged. Put your target orders in, build your plan, and make sure you have someone there to kind of tap you on the shoulder and remind you that you're doing the things that you need to be doing in order to complete your plan, because execution is more important than building it. And really, that's. That's where I'm at. [00:45:26] Speaker A: Sounds great. Angie, thank you so much for joining us this week. Hopefully, we can check in with you once again or a few more times in the near future and have a great spring. Thanks again. [00:45:38] Speaker B: You, too. Thanks for having me. [00:45:40] Speaker A: All right, folks, what a great conversation with Angie. I hope she's joined us again here in sometime this summer. Wealth of knowledge there. Okay, so let's. Let's move over to the mailbag segment here, of course, sponsored by pioneer seeds. All you have to do is ask a question and you get entered to win a bag, potentially to win a bag of p 516 L. We're doing canola seed for one more month here. We're going to draw for this at the end of April on the last episode of the month. And there's only one person in so far. I believe it's just Alden that's. That's in so far this month. So I know I could tell you're busy because the mailbag was swamped there for a couple months, and I was looking back, and I think I have everything pretty much answered. I think there might be one more from Kurt that I have to back to you about the US election and currency. But for the most part, I think we have. We've answered just about everything. I know there's a few people that I need to email back and do some follow up conversations and. But I can tell you're busy out there, so I'm going to turn the tables over to you or turn them on you right now and ask you guys a question. Since I don't have to answer anything difficult this week, my question is, you're about to get, if you're not already, but you're about to get very, very busy in the. In the field. So my question is, do you guys want more content from the what the Futures podcast do you want additional episodes in May? Do you want maybe some live views, videos or interaction during the busy seating time? Do you want more from the what the Futures podcast? Hit me up at Ryan at what the Futurespodcast Dot ca. Let me know. Yes, and what you'd like to see. Would you like to see another additional podcast? Would you like to see something short and sweet, crop markets summaries or let me know what you're looking for and let me know if I should be putting out extra content in May. I I don't want to do it if you're going to be too busy to listen to it anyway. Right? So I don't want to do it if you're too busy, but that's my question. Should the what the Futures podcast put out more content starting here in May? All right, we're getting towards the end here, folks. Crop prices, news out there. I don't have a lot of news where newsworthy stories, obviously, geopolitical events. It's getting more tense in the Middle east. It's getting more tense in Ukraine as well. So we're going to keep our eyes tuned over to that, keep an eye on what's happening there. It's all about weather here in the northern hemisphere right now. I know southern parts of Russia are starting to get dry. Angie mentioned that some production totals are starting to get pulled back here as well. I know some early estimates out of Australia, but it's all about weather now in our growing season. And of course, the prairies here received a decent moisture event the last couple days and portions of the corn belt as well. So let's switch gears to crop prices. And first one I want to mention here is old crop oats. I know that Keith had a question a couple months ago about oats. You know, would they get back to $5 a bushel? Well, Linden, Alberta, as a delivery point is now $5 a bushel. And I just want to highlight, you know, two weeks ago they were 480. Last week, 490. This week, $5. That's an uptrend, folks. We've got an uptrend in the old crop oat market. And we'll see here when the next update comes out, if it pulls back, if this $5 gets some bushels out of the bins, I'm assuming it will. Not seeing the same thing in Saskatchewan quite yet. But hey, we got a five out there and we'll see if it means anything else in the next couple of days or weeks. Feed barley bids again across the prairies. There's a lot of fives, uh, closer to Lethbridge you get, the higher it gets. Uh, seeing some, uh, demand from line companies. And so portions of, uh, of Saskatchewan, you're seeing that 515, maybe a 525 portions of central to northern Alberta, you're up in that 550 range for old crop feed barley. And, um, again, folks, I I think that's a level where you got to pull the trigger and clean out. There's going to be a lot of barley carried over this year. And if you don't clean out now, then you're looking for that big drought event to happen this summer. And, hey, you might be right and it may be worthwhile holding off, but for my money, I'm. If I. I've been a barley seller for a long time, but if I, if I would still have some of the bins, I'd be pulling the trigger here at that 525 to 550 level. At some of these line companies. We also have a malt bid update in central Alberta. Rar came out with a 660 bid. Now, of course, you need to have production contract with those folks to take advantage. They're very similar to how the canadian wheat board used to work where you can only sell ten bushels at a time. So they're allowing farmers to sell those ten bushels at 660. Now, the reason I bring this one up is because the high that they have for this year, 670 below, is 640. So it's been a 670, a 650, a 640. Now we're back to a 660. A little uptrend in old crop oats, little uptrend here in new crop malt barley. Again, it's a little bit different everywhere, but wanted to highlight that for those tuning in. Of course, India did extend its, um, uh, how do I want to say this, but the, the, uh, import, uh, tariff has remained suspended, I guess, um, until the end of June now. So those $14 bids are still are out there for old crop yellow peas. I did see a 14 picked up on farm as well. And so there's probably not a lot of pulses out there. If you want to go fishing, a good opportunity to do that, maybe you throw a 15 out there for a week and see what happens. But, yeah, if you got some old crop yellow peas left, there's an opportunity there. New crop yellow peas. Not seeing a whole bunch of changes because, of course, this tariff, we don't know if it'll be back on here at the end of June or not. So new crop bids have been kind of stuck at that eleven dollar level. Last thing here for, for this week, canola futures, as of recording here, have hit a technical support line. Of course, Canola's pulled back quite aggressively the last couple of weeks. I know you're not concerned about that because, yeah, you did a little bit old crop and you did some new crop as well, so you're fine. But, you know, the people that are a lot smarter than I am letting us know that technical support is here. So may is trading at 610, and we'll see if this level can hold and bounce from, from here. Of course, we are trading back down from that 645 650 level, and we're trading at 610 now. So we've lost about a buck a bushel there. I think that's about it. On, on prices. I know green lentils continue to slide for new crop with all that extra acreage, but we'll leave it at that for now. So now our eating your veggies segment. Just three quick things for this week. I know I've been keeping you on your toes here the last number of weeks, but my three things to focus on, of course, eating your veggies, you have to eat your veggies because it's the right thing to do, or I hope it is. Number one, though, I'd like you to turn on your ringer, your phone. Okay. And I know that's a weird one to throw out there, but you're, you're very busy, and maybe if your phone's ringing off the hook, then. Okay, I get it. But you may receive an important phone call from a grain buyer or an advisor or someone this spring that you need to take advantage of. So just give yourself that extra chance to pick up the phone and just turn on your ringer. Maybe it's just for during trading hours or maybe it's just for the morning or something like that, but I know all of us, many of us have a tendency to keep our ringers off on our phones. But turn on your ringer. Make sure you can accept those calls, you know, when they're coming through, or at least see that you have to return one. And, of course, easier for your staff and your labor folks helping you put the crop in to get a hold of you as well. Second one, set targets. That's been a little bit of a theme here in today's episode, but set targets on, on spring wheat, CPS wheat, Durham yellow peas. You know, green peas, we've been a seller. Maple peas, we've been a seller. But get your targets out, canola, just about every single crop right now. Maybe not on lentils, green lentils, because the market's sliding. But get your targets out there. Old crop, new crop, get something out there. We're not increasing the volume of contracts we're doing yet. We're still doing small increments, small tonnage. We're going to increase that as we get the crop planted here. We're going to do larger contracts at some point, but keeping them nice and small and smaller than usual. But get those targets out there and give yourself a chance to do some marketing. And then the last thing is a fun one. It's what I'm doing tonight. But, you know, you've, you've created your plan for 2024 on how you're going to, what you're going to grow and how you're going to market this crop. You know, your margins. You've got everything ready. You've got your equipment all ready to go. Maybe you've started already, but your equipment's ready to rock and roll or it's very close. And so when you get a chance, if you get one more chance to socialize here before you get swamped in, in the growing season, take a chance, opportunity to do that. Take that opportunity. You know, maybe it's a dinner with your, with your partner or something with your family and your kids. Maybe it's a, an activity you head out to, an event of some sort. Maybe it's getting together with, with the local farmers and having a few bevies and just chatting about the year. But it's what I'm doing tonight, and I strongly encourage you, if you get a chance, please take advantage and do that because you are going to be swamped now until, you know, after harvest. So take a chance to socialize if you can. I know you get a little break in July, but honestly, it's just a good time to sleep. Okay. In closing here for this week's episode, a quick note here. Egg I three, I chatted with Kyle. He's the lead broker there. Egg I three, of course, is a private yield based crop insurance offering risk management team over there, but they have a little more capacity for the 2024 crop. So if you're still looking at your crop insurance, we're trying to figure out how to manage your risk on the farm. Reach out to them there at Agi three AI. That's the website. And of course, Kyle, there's the lead broker. Also, I've got my 2024 playoff hockey pool going. It's office pools. It's in your email. The password is limit up to join it the league is what the futures, and we have about 20 teams in there right now. So that's great. Let's keep it going. I've got behind me, I'm starting to organize my prizes, but I've got some hats, coffee cups. I've got a few other things. I'm again, the Milwaukee guys come in tonight, so pick up a few tools to give away, but I'll have some great prizes here for those participating, of course, YouTube, music. You can go to the what the futures playlist. My song for this week is if I had a million dollars by the bare naked ladies. Last week was prince. This week I'm going bare naked ladies. It's on the playlist. Just thinking, you know, if I had a million bucks, what would I do with it? And as a farm, you're just gonna put it down on a loan or something, right? Pay down something. But it's nice to daydream if you had a million bucks to spend or blow out there, of course. Folks, I appreciate everyone tuning into the episode again. Thank you to our sponsors, Upl egg I three John Deere pioneer seeds. We appreciate your support. If you want to collaborate with the what's the Futures Pond podcast, reach out on our website at whatthefuturespodcast. Ca, of course, follow us on social media, folks. We're on Instagram, Facebook. I've got some folks helping me out on the marketing side. We've switched it up here a little bit lately, and so tune in. Give us a, like, give us a follow, leave us a comment. I do my best to get back to all the messages as well, so look forward to the interaction there. Have a great rest of your day. Have a great weekend. If you're tuning in on the weekend, and that's it for me this week, I'm out.