Canola Headed for $360...

[charliep]

It has been a tough year.

If I looked at the following three factors, which one has had more impact on bottom line.

Input prices.

Declining crop prices.

Production challenges (yield and quality).

Fixed asset decions and financing (land rent, machinery purchases, etc).

[SASKFARMER3]

Production issues! Tough to fill good contracts if your given shit weather! Best plans are thrown out the window! Paying to get out of contracts that you can't fill is rough! Price is relevant! Made money in shit years but costs were way lower!
Simply if stupid farmers keep feeding the perisites they survive! why shoot for a 60 bpa if no one wants the shit!

[agstar77]

How about a screwed transport system that distorts prices, not on your list. How do producers control that?

[SASKFARMER3]

Agree our transport system last winter let grain companies screw farmers and no one complained!

[wakopa]

I sure get called stupid a lot by poeple with fake names. Ebrandon poeple called me stupid lots but I've been banned from there, maybe I should be banned from here , braveheart u got any extra anti- depressants.

[hobbyfrmr]

Sell out now while your land is still regarded as high value.

[macdon02]

Personally I m watching lows from 05. Fwiw $230ish. Can't beat the zit faced computer geeks so I joined them.

[perfecho]

And yet, farmers will stand in line for more fertilizer and chemicals to get a good crop.....why? it is a genetic thing....study says women chose good providers...
There is no rational reason for farmers to put more fertilizer, chemicals and increase land rent. Brain washed or what ever, it does not make sense.
and thats what makes for cheap food....keep producing....on ego, not sensibility.
Half your production, half your costs and increase your net per bushel...not your gross...but it ain't gonna happen....
Back to the wine......

[farming101]

The 2005 low for canola? Really?
For starters ending stocks could drop by well over 50%.
Canola burn is running at a very good clip.Between the crush and exports the 2.4 million tonne carryover is 3/4 gone already.

[charliep]

I'm not going to guess how far canola will decline but $230 does seem excessive. The part of the equation from a fundamental standpoint is a better understanding of world vegoil prices and where the cross over occurs when more biofuel has a better fit/increases blend with crude oil. This to me means more watching geo political factors and black swan events (unknowns that can't be planned for).

One thing that its talked about so far is canola quality and how this will fit into the equation. Demand for the most part is No. 1 canola with a tolerance for 2. Not second guessing but the amount of 3's and sample on account green seed will be important to the market. How the market deals with this and discount structure will be things to watch.

[charliep]

The Canadian canola supply demand will be much tighter this year. Will let others scrap over exact numbers but likely about 16 to 17 MMT combined carryin and production. Core customer (domestic crusher, Japan, US and Mexico) in the 11 to 12 MMT area. That leaves China and other more price sensitive markets for an additional 4 MMT. How much is sold to China this fall will be interesting. Once canola is sold and leaves the country, it doesn't come back.

Will be a year that drives farmers but a very interesting one for market followers. I suspect will provide some interesting opportunities for people who trade the market.

[charliep]

We also have transportation regulation that highlights volume at least to November. Canola is the easiest of any of the crops to move big volumes. Wheat is a crop that has big but the dogs breakfast of grades and quality characteristics is going to create a real challenge about what is loaded in the country and what is sold/delivered at port. Don't know how this will be resolved in the performance system that highlights volume. Hopefully blending by everyone including farmers to lowest common denominator in terms of grade isn't 100 % the answer. Quality still counts so there is still need to segregate.

[errolanderson]

http://www.bloomberg.com/news/2014-09-20/global-finance-chiefs-said-to-warn-of-mounting-economic-risks.html