Canola spreads

[farming101]

The spreads unwound significantly today together with a sizable drop in Futures prices.
It will be interesting to see what total open interest is tomorrow for today's activity but it would seem at first glance that a lot of farmers got their canola priced today.
Adding to that is the possibility that with the prices dropping all day speculators took some risk off at the end of the day and sent the market down hard in the last 15 minutes.
If this pattern continues $10 canola will be the ceiling for the old crop year.
MAR-JUL SPREAD
<a href="http://photobucket.com/" target="_blank"><img src="http://i1211.photobucket.com/albums/cc421/farming101/Mar15-Jul15%20spread%20Jan%2028%202015_zpsovjnuksb.jpg&q uot; border="0" alt=" photo Mar15-Jul15 spread Jan 28 2015_zpsovjnuksb.jpg"/></a>

[Hopperbin]

Realistic basis could help by 70 cents per bushel. Futures have not much to do with offered price these days.

[Hopperbin]

Realistic basis could help by 70 cents per bushel. Futures have not much to do with offered price these days.

[farming101]

For sure, the present basis is out to lunch, but there will not be any improvement if commercial stocks keep rising. 1.46 million tonnes in the commercial facilities last report.

[jdepape]

Agree - canola stocks are highest they've been all year. Works out to about 7 weeks of demand - that's a very high visible-stocks-to-use ratio.

[charliep]

I found John's comments interesting a previous canola thread. Last posting.

[URL="https://www.agriville.com/cgi-bin/forums/viewThread.cgi?1421954962"]spreads discussion[/URL]

[ado089]

Canola is so thinly traded that farmer hedging has the effect of pushing down the futures while speculators play in the nearby. Someone once told me the natural state of the canola market is to be inverted.