Canadian Dollar

[crusher]

Sorry for opening a thread on something related to commodity marketing, but did anyone hedge the dollar a couple of days ago on the low?

[mbratrud]

Not yet but im watching very close. Do you think we have seen the bottom? Banks are still saying we will be parity and beyond but yikes... Seems anything can happen in these troubled times, it doesnt really have to make sense. If we see it go below .90 I will definately be hedging a large percentage of our farms sales.

[mbratrud]

Oh and to make this thread more in tune with everything but marketing forum. If i'm not able to accomplish my $ hedge it will because the CWB did something to screw it up... LOL

[SASKFARMER3]

Hey crusher all the last topicks reflect a farmers marketing decisions. All do for a farmer and you are correct on dollar.

[dave4441]

If you guys can tell us if USA will continue to be the best of the worst and/or if Europe/Spain/Greece have hit there lowest point, then we can discuss weather or not the dollar has hit it's low. Impossible to pick a bottom or top in the currency market. You can not speculate on currency and pick a bottom to the similar extent that you can on grain.

[SASKFARMER3]

I read somewhere the US in comparison is worse than Greece. One on One. So where will it go can anyone guess.

[cottonpicken]

The usdx has lost about 96% of its value.

[mbratrud]

I Agree Dave444 but the dollar is a big part of our pricing system particularly anything trading in US$, and it is something to be mindful of but needs to be part of a larger Marketing Strategy. Certainly you have to also take into consideration who your competitors on the world stage are for each commodity and evaluate their currency as well. For example Yellow Peas, Flax and Canola might be more affected by the Euro. But a partial hedge on Lentils for example in a situation where you felt strongly the dollar was going to rise in a "significant" way against the USD should be looked at. Anyone working for anything less than 5% is going to get burned but if an opportunity is there for closer to 10% it has to be looked at.
There are several speculators playing forex every day and you have to be prepared for volatility, but that is precisely the reason we see opportunities like the one that may be upon us. Time as always will determine the winners and the losers.

[parsley]

1. Keep your eye on the US bond market.
Mainly China and Japan are UK buying. What if they stop buying?

2. A lot of global corporations are in debt up to their necks. There is a possibility you may not get paid by some of them.

3. The US is only buying time. Pars

[cottonpicken]

Im starting to rub off on you eh pars,lol.

The largest buyer of us bonds is actually the us
government.

This is the definition of monetization of debt.Which
is never talked about by people who liked to talk
about the markets.Which baffles me.

The other funny thing is the us government spends
more on the military than it did during ww2.Think
about that fact for a second.

Did i say funny i ment scary.

[jensend]

http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html

another measure of the illness of the american economy psychology has gone south.

[dave4441]

I agree with those things, just i hear people talking about taking a hedge on currency, for a farm that realizes no sales in US dollars. I find it hard to comprehend if it is pure speculation or a true hedge (actually, your account will not call it a hedge, that much i am sure on). CDN dollar has appreciated 5% and new crop red lentils have dropped 3 cents in the same time. Demand and supply figure into it so greatly. I also agree long term sees a firmer US dollar, but what if CDN dollar falls to 1.15, from 1.05 today and you have a 10% margin call on something that is not a true hedge. Are people actually doing this? I am not sure i can see value in this for our farm.

[mbratrud]

To be clear Dave444 that is precisely why I wouldn’t get into this "game" as a farmer unless there was real potential for 10% gain. To your last point If I decide to sell Canola for $9 because I think that is a profitable number and there are many things indicating that it is going be less than that, then the price goes to $9.50 how is that any different? Hedge is a word we throw around loosely, and like you say most of us have spec accounts. Maybe it is better described as doing our best to mitigate risk with the tools and information we have at the time. So I view the dollar at sub .90 cents to the USD as a buying opportunity at this time. To protect me from the risk of a Strong CAD against a weak USD and Euro. So something I may look at doing is if my next Lentil sale is going to be worth around $100,000, (which I wont make until I am more comfortable with production) I may look at buying 1 Dec Contract if I seen a good opportunity below .90 for example. Yes people are actually doing this.

[mbratrud]

Pars, Cott,

So what does your crystal ball say? What trumps what US shit storm or EU shitstorm. Maybe we all should be buying Iraqi dollars?

[mbratrud]

1 Iraqi Dinar (IQD) value equal to Canadian Dollar (CAD) 0.0007833