Canola Marketing

[fjlip]

No worries, RITZ to the rescue....

http://us2.campaign-archive2.com/?u=79c01792d64340d37dcb06069&id=7ee3dfed22&e=9fa69 fdab4
The Canadian canola industry generates $19.3 billion annual in economic activity and nearly a quarter of a million jobs. This funding initiative will continue to help the industry build markets and keep them open through:
-Developing a deep understanding of social, economic and political drivers of the target geographies
-Engaging experts to develop strong partnerships with key influencers
-Educating the end-user in the positive attributes of canola oil and meal
-Contributing and coordinating with partners on market access barriers

bla, bla, bla, but how are you going to make dumb farmers grow it?

[charliep]

ICE Canola and CBT soyoil are positive again today in a sea of red. With regards to unsold canola (still in the bin unpriced):

1) What is your market outlook?

2) What is your strategy/outcome in your canola game plan?

3) What are the best marketing tools that best fit your marketing strategy.

[mcdon]

Charlie,
1)prices to work lower
2)sell
3)sell nov futures against inventory, backspread when inverse appreciates.

[charliep]

mcdon,

Thanks for ideas. Could you help me out with the process around the back spread.

[mcdon]

I think the market can move lower so I want at least some protection. If I am going to short futures I am going to choose the month with the most downside. I will choose the weakest month given what I think the spreads will do. I anticipate the July/Nov to continue to move to a larger inverse given the relatively tight supplies. If I am correct the Nov will move lower relative to cash prices. When I am ready to pull trigger on cash sales I can opt to remove short Nov position. That is called back spreading. Used by commercials from the beginning of time. Have to have an educated opinion on spreads.

[mcdon]

Today's price action provides a snapshot of above strategy. March/nov spread widening by another$3, by putting shorts in Nov I can participate in upside move in cash should it continue, if market moves lower nov should move lower relative to March.

[farming101]

Be watchful, inverse old crop/new crop futures seem to have a way of unwinding.
In years where old crop gains on new crop from here forward usually the Nov contract has gone up too, just not as much.
2014/15 ending stocks are totally up in the air right now, but there hasn't been any guesses under 1M tonnes.
Happy marketing!

[charliep]

Spread held into the close. March contract up $3.70. November down $1.20.

[mcdon]

With respect to the inverted canola spreads,deliverable stocks have a large influence (1 million tonne carryout is used as a proxy/tipping point by trade, should probably be higher) but there are other influences such as contract specifications. This is where traders who know the implications of the specifications are at an advantage to the rest of the trade.

[charliep]

My carryover is closer to 1.5 million but that is still a stocks use of under 10 % or less than 1 months supply on July 31.

I am finding this weeks Grain Statistics interesting.

1.3 millions tonnes of canola in commercial position. Of this, 800,000 tonnes is in primary elevators. Only 83,000 is Vancouver and 80,000 tonnes in transit (in a rail car). Hopefully weather stays good to keep the supply chain moving.

[farming101]

Canola producers have done their work as far as getting canola into position for export. Now we can expect nearby basis to worsen.
The Pacific stocks include Prince Rupert as well. There are 4 ships in port or due soon according to PR vessel report. The one, Maverick Gunner, has been there since December 16.

[farming101]

I should have noted those are just the ships designated to load canola. Those four ships likely need over 150,000 tonnes to fill them.