canola strategy

[errolanderson]

Group . . . another idea to guard these
hot canola values is;

sign a DDC contract, then buy a call
option.

Example: Sign a DDC for $14/bu, then
purchase a Nov/Jan call for say $20/Mt
(50 cents/bu). Nov canola call option
now about $20/MT.

DDC $14/bu - call premium (50 cents/bu)
= $13.50/bu floor but your price upside
is open. If canola goes to the moon, you
are on board.

Advantage: you are on board in case of a
moon shot. Also, this strategy offers
you a higher floor price than if you
purchased a put option only.

Disadvantage: you are committing to
production/delivery.

food for thought . . .

Errol

[errolanderson]

Nov canola $650 calls now valued at $20/MT

(add this to 1st post to try to make sense
of this logic).

[wilagro]

So now we have a commercial outfit giving us FREE advice on FUTURES. Sweet.

[wilagro]

I'd better get busy learning "Stock Marketeez" in order to keep up with this NEW WORLD ORDER that we are living with/under...whatever.

[Kodiak]

Willy, Errol is offering advice (on a take it or leave it basis). It costs you nothing. If you chose to make use of it, it might even pay you handsome dividends.

He is putting himself out there, expecting nothing in return from you, and you respond with a sarcastic comment?!??

You are truly an ungrateful and insufferable individual.

Instead of vitriol, consider Errol's ideas (and other's as well) and consider yourself priveleged to have the opportunity to consider and avail yourself of many many ideas.

[rhoff]

Thank you Kodiak. Well said.

[oliver990]

thanks Errol.

[furrowtickler]

Good on you Kodiak. Willie and burbot can be just like those two old farts on the muppets sometimes.

[TOM4CWB]

Perhaps they have been in the weed patch too much ...lately...perhaps it has blurred their perception...

Errol;

What are the chances of this market falling big time this year... with the forcast and multi counry losses we have seen?

Perhaps doing nothing... selling cash grains is prudent if we are 50 percent of new crop sales?

[errolanderson]

good point Tom . . . this is an old
cliche , but this has been somewhat of a
perfect storm of factors to drive grain
prices higher.

Supplies will be very tight through the
next crop year given this drought and
problems in the U.K. and Russia. My only
concern about a market pullback stems
from our global economies ie: China. I
know people have to eat, but this China
meltdown will be a commodity hit down
the road.

IMO there will be setbacks, but then
quick rebounds. Growers are definately
in the driver's seat, but these credit
markets have me spooked and somewhat
cautious heading into the new year.

Errol

[tstep]

Thanks Errol. Your topics are always good food for thought...

[wd9]

Can we really believe the stories of
global economic crunch? Corps are flush
with cash, debt ceilings are only a vote
away, seems the talk - like the money -
goes on and on. If the 'crisis' was an
actual problem, canola would be 5 bucks.

[cottonpicken]

The symptoms of the global financial problems are-
100 dollar oil,1600 dollar gold,16 dollar beans....

[mcfarms]

Add QE 3 to the equation

[MarshallDillon]

This could be the one historic moneymaking year that near-retirees dream about. Agree 100% with Mr.Anderson the fly in the ointment will be macro. A black swan is right around the corner.