Canola Prices

[farmaholic]

Charlie, an honest question: Do you ever employ some of your own strategies? You don't have to be a producer to participate, do you?

[freewheat]

When things are normal, and supply to the crushers is assured, soy is the driver. But IMO, if what is happening out there actually as true as what I hear on here and on other forums, a huge decoupling will take place, unless the crushers shut down for lack of product.

I grew a specialty canola this year, which has an 85 dollar basis, and free trucking. I sure am watching the markets. But more importantly, is honestly IMO watching crop reports and chatter on here and a few others sites I watch, Canadian and american. The americans have some very big issues with excessive rain.

My marketing plan, is to try and price as this thing revs up. IMO, it has only just begun.

I am very fortunate to be sitting very pretty right now, with awesome moisture conditions, and a very nice crop coming. I am not going to price a thing though, until we get a mid July rain, and more assurance of this crop making it to the end. Even so, I want the physical product in my bins. I have been there done that a few times, and not made the bushels I needed or priced, due to either not seeding or having drowned out crops, so I am nervous and sensitive about that.

I guess the market, like everyone else does. Buying calls or puts? I simply am not well off enough to afford to play that way yet to be up front.

This year IMO, is going to be crazy, IF what guys on here are saying is reality and I have no reason to doubt them...

[charliep]

I have in the past but I don't now. Don't like leveraged investments/risk involved as a speculator.

Don't know why you guys get so offended but I am talking business risk management strategies. Whether you realize it or not, you have a position in the market. Long growing crop or inventory in the bin. Just trying (and failing) to encourage you to pick your pricing points during the year when you finally make the decision to sell some or use other tools to lock in a price or a minimum price contract.

Again, your choice. Just encouraging discipline versus 100 % horny bull about the market.

[farmaholic]

I'm with freewheat, I'll deal with the inventory when its in the bin.

Honestly, it is probably a lack of knowledge that keeps me from participating in calls and puts and that I'm a cheap bastard who hates buying stuff that may expire worthless. But I have been listening and I understand that may not necessarily be a bad thing(expiring worthless)...LOL. It is insurance.

[boarderbloke]

Re canola, likely end up seeing profit taking today, being Friday, and they'll be hoping for a change in the forecast over the weekend. If nothing changes, look out Monday.

[ado089]

I agree with Charlie. The market started pricing the weather way earlier than I expected. I don't think we're done climbing yet but I also feel like $600 is a stretch. These local pricks will run through forward committed canola then slow production before paying us over $12. I'd start buying calls at $560

[ado089]

Look at the basis, there's no panic out there.

[ado089]

Sorry that should be buying puts.

[charliep]

I going to post the November chart. Prices very rarely carry on higher at this steep an angle. My preference would be to see another dip to $500 with this area attracting commercial/providing the support area.

[URL="http://www.farms.com/markets/?page=chart&sym=RSX15"]Nov ICE canola[/URL]

[boarderbloke]

ado089, same down here SESK, JUNE or JULY deliveries still have $0.80/bus or $35/t under basis at our nearest buyer. I believe Weyburn is worse yet.

[bucket]

Eyebrow is at minus 58 bucks a tonne on canola.

It's ****ing crazy. GDT up the line is minus 35. Same company 35 miles apart.

Same rail line.

Nope not getting ****ed at all.

[charliep]

It is a time that having knowledge/ability to use futures/options to lock in prices will likely be an advantage with the caveat you better be prepared to top up margin if things go crazy. Basis says to defer cash pricing. Futures are rallying.

Just ideas/not recommendations but assuming we make our way to $560, start buying puts. A way to finance the puts would be to sell $600 calls. The worst outcome would be you have a short futures position at $600 - effectively a grain pricing order.

[Braveheart]

I know it's a much different world than in 1980 when I took my first grain marketing course, but, the instructor said, and this is more often true than not, as soon as everyone on the street starts saying, "buy futures, they can only go up", it's time to sell.

If you want to see God laugh, tell him your plans.

[charliep]

Actually I am thinking about my speaking engagements with Don Bousquet. Don was always a bull and I was the bear. We did our best job of presenting the information and everyone took what they/made their own decisions.

[cottonpicken]

If your sitting naked at 150 an acre you have lost ballpark 30 on canola and wheat big ruff guesstimate on a year when there is no profit.

Playing the options market on the put side seems real risky at this point i kind of think calls to limit anymore downside makes more sence just an opinion.

One other aspect is actual value of product historically. Everyone thinks oil is low now but not to long ago it had never been as high. My opinion is prices are actually very low now so the upside is high.