Does Anyone Follow Futures Markets

[charliep]

Most of the grain companies offer similar services and websites in Canada. As with the Glencore site, password protected and oriented to customers.

[cottonpicken]

One of these days we are going to see some
farms caught short in the canola trade

[charliep]

Not sure what you mean by short the market. A farmer will be short
futures but they will also be long cash canola. If a futures heads higher,
losses on the futures will be offset by gains on the cash side (other things
equal). Margin calls are a different thing. You have better have a friendly
banker or a way of cash flowing margin calls.

[charliep]

One nice thing about a futures contract is the ease of exit if you get caught on the wrong side.

Examples. Lose a crop to not able to seed this spring, hail, etc. Futures - simply buy it back (may be some margin pain). Differed delivery (unless act of God), you are stuck with the contract or a buy out.

Market factors change and you don't want to carry the crop priced anymore. A weather problem in the US or some other major crop producing region.

Ugly basis or unknown basis. Sell futures and wait for the basis you find acceptable.

[boarderbloke]

Been following futures for many years, however, be'n keeping track of, and recording BASIS more closly over the last five years. Much more helpful as history for BASIS is hard to look up or find, while past futures prices are easy now days.
Also, I always watch for reports for any info.
All has helped in my marketing, and has given me better confidence.

[cottonpicken]

Caught short,basically on the wrong side.

Yes you can exit and enter,but you can quickly
lose a lot of money.in this case I was referring to
farmers who forward contract,have no crop to
sell,sometimes in a blink of an eye then have a
price spike and are caught without a chair to sit
in. With the weather and market chaos it seems
like a thing worth considering. Luckily farmers are
all hardcore gamblers at heart.

[charliep]

Level of pain is all relative.

Example. Anticipate a 40 bu/acre canola crop.

You lock in $12.50/bu on 10 bu/acre.

White combine comes through and wipes you out. Prices go to $20/bu.

Things that could have happened along the way to reduce the pain but a buy out on the contract of $7.50/tonne or $75/acre.

Your pain of the hail storm (assuming no crop or hail insurance) - $600/acre from the unpriced crop and $125/acre from the stuff you priced. Pain equals $725/acre offside from the plan.

[charliep]

$7.50/bu - not tonne.

[charliep]

Have to plug the variable price benefit (Alberta - October coverage adjustment) or option (Saskatchewan - July price adjustment).

[cottonpicken]

We are both assuming a lot of things. Some
maybe already underwater on their new crop
contracts. Should they take their licks now? Or
wait it out ?

It is a harsh game and a position is a position
whether it's sold now or latter.

[cottonpicken]

And a 75 dollar loss an acre is a loss and
nothing else.