canola, how high will it go

[mbratrud]

I think once the harvest pressure (tough stuff) has backed off started already I think. Basis levels could improve a bit making $9.50 achievable by seeding. But there are risks, Brazil's Soybean production estimates were just raised and Argentina is seeing favorable weather, this could have some impact in coming months. Put options are a good strategy March $410 puts are trading for a reasonable price this is good protection if you want to wait awhile longer to sell. Or put yourself out of your misery and sell at $9, which could very well be right near the top for the winter anyway. There is going to be a large carryout, and the perception is growing that acres of Canola will again get larger. Just my 2 cents

[furrowtickler]

Canola carry over will not be large, in fact the carry should be very tight by August. 60% or more of the on farm stocks must move very shortly b/c of moisture/storage conditons. Also a relativly big percentage of last years canola was contracted. Remember that Alberta's crop yeild was far below the prev. two years. Every day there are more and more confirmed reports of heated canola in bins, canola in bags that is frozen solid. For these reasons I do not beleive that the ending stocks will be as they say. It is going to be a very long winter for some.
Watch basis levels and I think $9.5-$9.75 is possible. We locked in a $25 basis on clearfeild in Oct. that trigered $10/bus last week. Pricing oppertunities will be there throughout the winter.

[charliep]

I note the July closed yesterday at $433.90/tonne. Will see what happens today but yesterday, you could have had $9.50/bu for May/June delivery with a $16/tonne basis. To achieve the magic $10/bu across the prairies, you will have to have futures over $460/tonne some time, a rally of $45 on the Jan or $26 on the July (assuming the $16 basis).