Pricing 2008 canola?

[melvill]

Speaking about canola market strategy. Over the last week I've talked (by phone) to three producers who are about 20% priced on new/crop 2008 canola production. I say "about" because next year's canola acreage is still pretty fluid depending on things like disease potential and other production risk factors.

I note that at least one private market consulting firm is recommending 25% pricing of 08 canola.

Has anyone begun pricing new/crop 2008 canola yet? If "yes", what are your thoughts? If "no", why not?

[craig]

Have done some pricing and have targets in for a little more. I still make decisions based on gross returns per acre and current numbers indicate high gross with normal yields. While I am more bullish on canola than cereals, I have learned that the markets are influenced by many more things than just fundamentals. Also more difficult to forward sell other crops than canola. A point to consider. When producers get burned one year because they forward sold they tend to leave their crop unpriced the following year often when they should have priced. At the end of the day you need a good market plan and stick to your guns. Ride good prices as long as you can. If prices are high or higher next year you will likely have the opportunity to hedge 2009 at profitable levels.Somewhere along the road prices will likely come back from their lofty levels.

[cropduster]

Like your comments Craig,that`s why I`m attending the Informa conference in Calgary(Nov 29-30-Radisson Hotel) to try and get a better perspective of market influences.

[brian99]

Craig is right Lee, some neighbours around here are hoppin' mad they started selling wheat too early. Swear they won't do that again. I made my marketing plan in wheat and have stuck to it. Has worked out well so far.
Where is 08 canola at right now? I usually grow canola seed and haven't been watching the basis. There's alot of potential for canola to higher in a spike. Locking in here deep in the black, never a bad place to start.
Canola seed companies need to take heed, there's alot of money in commercial canola right now. The "premium" for seed production may not be worth the risk for 08.

[TOM4CWB]

Lee,

Canola customers are going to have to "buy" our acres this year... and it is not going to be cheap.

One production scare on US wheat... and this market is in orbit... $15/bu US wheat means how much for our Canola?

The Aussie drought still in full swing... & the US Northern/CDN Fall Drought... means we are not close to seeing the top of this market yet!

[Zaphod]

Tom,

Curious if you think canola prices will have to go higher than they are now to encourage more acres? What will it take to buy your acres? Will the competition mostly be with barley? Or wheat? Or peas?

[melvill]

Tom, in spite of the idea from some producers that we are in a new paradigm - we're in a new era of permanently much higher farm prices - I've heard this several times before in my over 30-year career. Each time in the past that new paradigm wasn't the outcome because producers and crop agronomists and crop geneticists around the world, responded to the higher prices and were had higher production. Of course in the short term before the new production technology came along, the high prices curbed consumption. Remember the "the world is going to run out of food" scare.

What's scaring me now is that producers are becoming soooooooooooooooo bullish that some of their good sense about managing price risk is going right out the window. Yes, anytime there's a low carry in, like this year, I think next year's wheat market is going to be very volatile with some very good pricing opportunities. LIkely the same with canola. But have we entered a new era with $7.00/bu wheat and $10.00/bu canola an everyday event, I don't think so.