Found out the hard way today that the .85cent New Crop Soybean Basis I locked in back in November. "Had the Exchange locked in as well" So now when I look at pricing futures in US$ the conversion to Canadian is Done at PAR.
Upon further investigation I discovered that all the current pricing at some companies is being done at PAR. One company told me that's why the Basis is so wide?! Excuse me? If currency was being priced into Basis the Basis would narrow when CAD looses value to the US$...
My Point is MAKE SURE YOU HAVE ALL THE DETAILS when signing basis on commodities traded in US$. My Spidey senses are tingling that the Story would have been different if the CAD was worth 1.10...
Oct Delivery Soybean Basis Levels in Weyburn Sask today.
Richardson $2.17 under futures priced at Par. 9.90 per bushel CAD With Conversion Basis Actually equivalent to $3.23 CAD
Viterra $1.99 under futures priced at Par. 10.08 per Bushel CAD With Conversion Basis Actually equivalent to $3.05 CAD
P&H Not Buying....
So according to 1 Company it costs more than $3600 more today than in November to TRADE 1 SUPER B of Soybeans for Oct 2014 Delivery.
Berthold Farmers Elevator in North Dakota. 250 KM from my door has .90 cent Basis of Futures price of 12.07. For a Delivered price of 11.17 USD per bushel or 12.18 CAD. Trucking is about .85 cents per bushel for a net of 11.33 CAD per bushel at my bin.
DO YOUR HOMEWORK! Read your contract and make sure you know what you are signing.
There are Companies that don't do it this way and price your Basis and Futures Currency Separate. You need to understand what you are dealing with to know whether or not you should be hedging the CAD$ yourself or not. As you can see from the above examples this makes a HUGE difference right now and if our dollar continues to fall it will worse.
Upon further investigation I discovered that all the current pricing at some companies is being done at PAR. One company told me that's why the Basis is so wide?! Excuse me? If currency was being priced into Basis the Basis would narrow when CAD looses value to the US$...
My Point is MAKE SURE YOU HAVE ALL THE DETAILS when signing basis on commodities traded in US$. My Spidey senses are tingling that the Story would have been different if the CAD was worth 1.10...
Oct Delivery Soybean Basis Levels in Weyburn Sask today.
Richardson $2.17 under futures priced at Par. 9.90 per bushel CAD With Conversion Basis Actually equivalent to $3.23 CAD
Viterra $1.99 under futures priced at Par. 10.08 per Bushel CAD With Conversion Basis Actually equivalent to $3.05 CAD
P&H Not Buying....
So according to 1 Company it costs more than $3600 more today than in November to TRADE 1 SUPER B of Soybeans for Oct 2014 Delivery.
Berthold Farmers Elevator in North Dakota. 250 KM from my door has .90 cent Basis of Futures price of 12.07. For a Delivered price of 11.17 USD per bushel or 12.18 CAD. Trucking is about .85 cents per bushel for a net of 11.33 CAD per bushel at my bin.
DO YOUR HOMEWORK! Read your contract and make sure you know what you are signing.
There are Companies that don't do it this way and price your Basis and Futures Currency Separate. You need to understand what you are dealing with to know whether or not you should be hedging the CAD$ yourself or not. As you can see from the above examples this makes a HUGE difference right now and if our dollar continues to fall it will worse.