At what point will you begin pricing 2011 canola ?

[boarderbloke]

here in SESK, even we can price Nov'11 well over $10.00. Are the varriables too great to price at this time? If not, then what % of an avg crop would you price? Will the prime canola growing areas be wet again next year because of snow/rain? What about SA production? Is it necessary to know more of these factors before pricing? $10.00 might sound good, till you put it next to $15.00

[charliep]

Lots of talk of la nina but south american conditions good to date (only the very early crops seeded). Wrestling match between US corn and soybeans for acres.

In past 10 years, how often have you been able to lock in $10/bu canola right off the combine? Can you make money growing $10/bu canola? Can you cross hedge fall purchases of fertilizer with sales of canola (if you pre bought/fall applied $50/acre of 2011 fertilizer, sell 5 bu of 2011/12 canola production)? The argument would be if crop prices go up, so will fertilizer.

[charliep]

[URL="http://www.agweb.com/article/keep_your_la_nina_bets_small/"]la nina and s. am.[/URL]

[boarderbloke]

charliep, I don't think we've ever been able to price(in Oct) next years canola production for over $10.00/bus Nov deliverery in this part of the world! That is the reason I thought it would be good to stir some debate and hear the opinions of others. In away, it seems too good to be true! How far away is the world from truely being short of grain commodities? There has been record production in SA and USA over the last years, yet the demand grows! Something farmers never pay enough attention to are the DEMAND NUMBERS, we always get caught looking at acres and prodution. JMHO The plants at Yorkton(3hrs north) maybe playing a role here too?

[charliep]

Demand will be the theme of a project I am working on. It would keep me optimistic as a slugged through the last few days of combining. Will let others comment on their thoughts on new crop strategy.

[SASKFARMER3]

35000 bushels at 12 nothing less that's 10 bushels will have if still wet no more

[Hopperbin]

I am a bit more bullish on the canola yield for next year. Although in many places we had excessive rain and produced a 15 bushel crop because of it, our land is here is drainable and we are drying it out with tillage, it will be v ditched this fall and drainage will be good for spring, the crop will go in. I think high probability potential exists for a very large canola crop next year for most areas. Using own seed though is looking sexy to reduce risk.

[RedRiverMB]

I have priced some just over $10, there will be a lot of
canola going in the ground next year, these past few
weeks have allowed a lot of fall work which will have
the ground dried down a lot and black for spring time
in my area. Fert is locked down long ago and at $10
bucks for fall cash flow, I like it.

[SASKFARMER3]

Aussie canola estimate slashed. Extreme weather conditions have prompted the Australian Oilseeds Federation to wipe 185,000 tonnes off the national canola crop. In its October report, the AOF said the national crop was now expected to produce 2,065,000 tonnes, 8 per cent lower than last month's forecast of 2,250,000 tonnes.
Read and dont be stupit where 10 is king. ALSO EUrope will drop ****seed acreage.
European farmers expected to switch to grains from ****seed. Growers will sow 57.2m hectares with grains for 2011, a rise of 1.2m hectares year on year, Strategie Grains said in its first plantings estimate for next year, reports Agrimoney. Oilseed sowings will drop by 300,000 hectares to 11.4m hectares. Plantings of ****seed, the region's major oilseed, will suffer a particular drop, of some 5%

[Klause]

$11 (at LDM where we deliver) is good,
now.

I'm worried about the QE going on...
with this race to the bottom, $11 canola
may well be equivalent to $8 canola next
fall.

Only way I'd sell bushels is cross-buy
fertilizer,seed, and spray - then sell
enough bu to cover the fertilizer
purchased, and an on-the-money call
option.

Why the call option? Well, if canola is
$15 next fall, and the weather keeps our
yields at 10bu/ac another year... the
call option will guarantee that I can
buy it out for minimal cost.

[charliep]

Just curious on the month and strike price for the canola. Maybe pretty expensive. Could do old crop or buy the call well out of the money to keep the cost down.

[ado089]

Wouldn't you buy the put? A $450 nov11 put is about 40 cents/bu and would set a floor. If you're wrong and the price goes up you're out 40 cent and you capture any gains with your actual production. If you're right and the price drops you're covered at a fairly respectable level.

[cottonpicken]

A little worried about the qe going on that's a good one

[Hopperbin]

qe? If ours dollars drop our grain prices should be higher. Go qe go.