Art of Grain Merchandising

No One Wants To Be A Mushroom

Posted by Sherry Lorton

Jul 26, 2016 10:18:51 AM

In our last Grain Accounting class the discussion turned to the importance of having a good banking relationship. A lender in the meeting made the comment “just don’t treat me like a mushroom.” With a lot of puzzled looks staring back at him he went on to explain, “you know … keep me in the dark and shovel on the manure.”

While his comment got a good chuckle from the group it also rang with a lot of truth. It hit home not just with the lenders but all who are a part of the grain merchandising team … the merchandiser, the accountant, the lender and upper management. Sometimes it feels like you’re being left in the dark about what’s going on with the numbers.

Maintaining an open line of communication is difficult in many businesses but it can be especially so in a grain-focused basis trading operation. The challenge is that the different sectors of the operation seem to hold different pieces of the puzzle. Until all pieces are put together no one really has a clear view of what the picture looks like. Let me give you a few examples:
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Topics: Mark-to-Market

Why the Best Accountants in the Grain Business Think Like a Merchandiser

Posted by Sherry Lorton

Oct 28, 2014 11:00:00 AM

As the Controller, CFO or CPA responsible for producing financial statements for your company’s grain division, do you sometimes feel that you are talking a different language than those around you?  Are there times when others disagree with the numbers even though you know everything is correct?  Can you discern why the numbers look the way they do from a merchandising perspective?  Are you as confident as you would like to be discussing the financial statement with the owner, grain manager, Board of Directors or lender and in terms they understand? 

Don’t feel alone.  The truth is, the complexity of today’s grain businesses require you and your grain accounting team not only to be skilled in the practices of accounting, but to also have a detailed working knowledge of basis trading, spreads and market values-- concepts and practices never taught in your accounting classes.

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Topics: Mark-to-Market

Grain Elevator Financing Tip: Over The Counter Commodity Futures Swaps

Posted by Jeff Reardon

Aug 12, 2014 11:00:00 AM

Volatile prices and the difficulty accessing credit during peak financing periods opened the market to provide commodity futures swaps as a method of grain elevator financing.

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Topics: Mark-to-Market, Grain Elevator Financing

Grain Elevator Financing Tip: Inventory Repurchase Agreements

Posted by Jeff Reardon

Aug 5, 2014 11:00:00 AM

Volatile prices mixed with a need to build working capital and equity pushed inventory repurchase agreements into the grain elevator financing and Mark to Market discussion for grain companies.

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Topics: Mark-to-Market, Grain Elevator Financing

The Process of Canadian Mark-to-Market

Posted by Jeff Reardon

May 16, 2014 10:27:00 AM

Once the documents are assembled and the choice is made as to what method of mark-to-market to use, the rest is a matter of doing the calculations and making the entries.  This job is easy with a simple routine. The task is to come up with seven general journal entries.

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Topics: Mark-to-Market