Canola Basis !

[boarderbloke]

does anyone have a grain company or buyer in their area looking for, or wanting canola ??? our cash basis here in SE SK is -$50.oo, yes thats right 50.00 under! Basis in all months were raised by $14.00/t today, droping the net price $0.32/bus! any word on which company got the 5 cargo's, or part there of?? surely they must be looking for canola??? it's a real kick in the head after such a favorable SC report.

[charliep]

Have you checked what kind of basis levels the grain companies/crushers are paying you on deferred delivery contracts later in the winter/spring? Will note the increase in value via carry in the canola futures is 5.5 %. That is January close of 476.70/tonne and July of $502.90. Add in what is likely to be a narrower basis and you are getting an extremely high return on your investment (assuming dry/low storage risk).

The issue on canola is grain companies/crushers don't want deliveries now - there is enough canola in the system already relative to their sales activities. Visible stocks in commercial position week 17 (nov 25) were 1.4 MMT, up from 1 MMT same date 2006. Stored canola represents 16 % of this years 8.7 MMT canola crop (two months of usage).

http://www.grainscanada.gc.ca/pubs/grainstats/2007-08/08gsw_shg17.pdf

[wedino]

Just called Viterra, Weyburn they're biding $10.06/bu. $33.05 under Jan., $44.65 under Mar. Not sure which month they're using. Where ya at, Boarderbloke?

[charliep]

Perhaps one of the other issues is a slow start to exports. Will note canola exports to week 17 were 1.6 MMT, about 300,000 tonnes behind last year. Assuming China and 50,000 tonne vessels, the sale of 5 ship loads is needed to play catch up on exports. COPA (Canadian Oilseed Processors Association) shows crush about 140,000 tonnes ahead of a year ago.

[boarderbloke]

wedino, Estevan district

[cottonpicken]

Its called panic and uncertiany.

Canola has not moved yet.

Big boy Hedge bets are being placed.

Sit back and enjoy.

After all its only been a generation.

[wedino]

That bet we have, Cotton, it's the only bet I've done where I'm hoping I lose.

[Zaphod]

Canola deliveries have been very heavy all fall. Elevator and terminal inventories are high and the companies haven't had to offer a good basis to get the canola. As soon as deliveries start to slow down, the basis will snap back to normal (or better).

[Burbert]

The Festive Season is upon us, everyone, and I mean everyone, even the open markets get lazyyy this time of year. Xmas parties and the big spend are on employees minds, screw business, until after New Year. The Holidays, travel, buying, drinking, thinking, resolution, tree hunting, the right gift, bill paying, thoughtful contemplation, year end, taxes, the true meaning of Christmas, etc. etc.
Grain buying unfortunately falls way, way, way down on the priority list this time of year. Guess that is truly an example of the open market in action eh!

[northfarmer]

burbert, unless you noticed, but since you do not, you can price canola in feb right now for over 10.50/bu, and MGEX wheat has punched through ten dollars.....

the open market is working, my b trains are delivering $8.50 bu peas...

so shut your yap and get back to rum and egg nog...

this is a discussion about canola basis...it is wide for good reason, and in time will be reduced, but with record and profitable prices people are selling...imagine that!!!!....oh, you do not grow canola....too bad ...

[smcgrath76]

Generally speaking...
Fewer primary producers, larger herds. Two groups, large commodity focused herds, value chain oriented herds.
Export driven.
More forage/aftermath based.
Cattle feeding not centered in AB. Processing, who knows?

[btjadenlepp]

i heard the business (5 cargoes to china this week) was done at $2/t over instore vancouver, which backs off to an even worse basis than we're seeing in sask.

just another reason in addition to sloppy visible supplies that the basis is weak. there are premiums popping up into a few elevators though, making it really important to shop around. in the se corner we saw everything from 32 under to 54 under last week.

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