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.

www.farmlinksolutions.ca

[rkaiser]

Good title farmer_son. Good way to introduce this proposal approved by four industry groups here in Alberta. Media will have their hand on it next week.

NOV 30th, 2007 JOINT AGREEMENT BETWEEN BEEF INITIATIVE GROUP, ALBERTA CATTLE FEEDERS ASSOC, WESTERN STOCK GROWERS ASSOCIATION, and the PROV. FEEDERS ASSOCIATIONS of ALBERTA:
[1] From where we now stand, it is imperative that we find someone as straight forward and result focused as for example a "Lee Iococca" CEO and a board of highly knowledgeable and aggressive industry personnel to work with him. This board would take the leadership role on trade policy. This board could technically operate under the auspices of existing industry organizations , however, with the understanding that existing industry organizations will defer to this board on matters of trade . All future govt assistance to industry needs to be contingent on a new clearly thought out business plan focused on increasing trade in markets beyond the NAFTA territory. Our survival hinges on trade, including trade with non-NAFTA markets, and we require in the long term a more diversified marketplace.
[2] We propose the reconstitution of CBEF and BIC (marketing agencies) with an enhanced mandate and an effective governance structure. CBEF has been hamstrung by both industry leadership and packer domination for too long. Current Canadian major packers obviously favor north – south trade. This may be part of the reason for our dismal headway in foreign market re entry. The new board handling trade and policy must have access to a workable CBEF like organization, virtually oriented and focused on the same objective. Such an organization does not exist as we speak.
[3] Further to the implementation of the above recommendations, A PRODUCER OWNED BEEF BROKERAGE CORPORATION will be formed. This corporation would stand beside existing Brokerage Companies and would never discourage the formation of others. Shareholders of this corporation will be the producers who wish to retain ownership of their cattle and beef products through to the point of wholesale or retail, unlike most currently existing corporations that only broker beef. Shares would be offered on a voluntary basis to all producers whether they vertically integrate or simply wish to support this new corporation. Share value of the initial offerings must be sufficiently attractive to producers in order to create entities of the magnitude required to restore profitability to the Canadian beef industry.
The mandate this corp will work under is as follows:
JOB 1 will be re-establishing trade for Canadian beef in non NAFTA territory while simultaneously building partnership investment between foreign markets and the Canadian cattle industry thus bridging the cultural gap existing between both. This model will uniquely identify Alberta and Canadian beef and explore ALL foreign markets. Th is corporation will partner with various govt agencies to promote this "uniquely branded" product, much as the Australian beef industry has done so effectively.
While partnering with organizations like CBEF and existing Provincial and Federal foreign trade offices, this corporation will be free to create market opportunities on a free enterprise basis. The industry needs to address certain existing trade constraints which have largely prevented a distinctly Canadian approach to market re-entry. Neither will this approach be restricted to foreign markets as there exists many opportunities for the vertical integration of producers into the North American market.
This corporation will allow both primary and intensive livestock sectors to partner. The past market model which this industry was built around has become dysfunctional and has never been conducive to the promotion of both primary and intensive sectors of the industry integrating into the value added chain. By partnering, the feedlot sector will reduce capitol investment on cattle purchases and maintain placement numbers, while simultaneously encouraging primary producers to actively integrate into the value added chain, thus preserving Canadian infrastructure as well as the Canadian beef herd population. We must be allowed to cease selling cattle on the hoof at a discount and become marketers of beef.
This business model will address the need to pass market signals up and down the production chain. All marketing and efficiency tools such as grade information back to producers post slaughter, age verification, and current information on health attributes such as leanness, CLA, and Omega 3 must be available. By becoming marketers of beef, producers will quickly adapt to the market's desires. The missing link in current attempts to persuade producers to age verify, for example, has been the lack of a clear economic incentive.
Last but possibly of the most importance, the brokerage corporation and the new CEO and board will be responsible to inform producers as to the obstacles faced by the sales teams. Information and statistics must flow to producers freely to insure these corporations remain flexible, dynamic, and cohesive. Knowledge is power, but only if the knowledge is shared. At times, this means anticipating our competitors next move and positioning ourselves accordingly. Not following in their footsteps.


This business plan uniquely addresses the needs of all aspects of the Canadian industry. This model will help keep feeder cattle in Canada, help keep Canadian slaughter capacity operating, and add value to a depressed live cattle market by increasing non NAFTA beef trade , without discouraging other brokerage companies from existing or starting up. Producer's taking ownership of their industry by vertically integrating into the value added chain is a great alternative to greatly shrinking the Canadian cattle industry.

[farmers_son]

With all due respect, what rkaiser has posted is a manifesto, not a business plan.

Manifesto definition: A manifesto is a public declaration of principles and intentions. Manifestos are often political in nature.

A business plan is quite different and typically would include financial projections and an explanation of how the stated objectives would be financially achieved.

I agree with smcgrath76. I do think the large commercially sized herd may be just as able to produce to niche value chains as the smaller herd. For example a lot of organic grain production is done by very large farmers. I see the need for provincial inspected abattoirs to be able to ship interprovincially before processing to fill a niche market would be viable.

The competitive advantage Alberta feedlots enjoyed after the removal of the Crow Rate Benefit has completely disappeared with the U.S. government’s recent policy on ethanol and bio fuels. The Alberta feeding industry may not move to Saskatchewan, more likely the feeding industry will move to the United States. At least one of our two major packers would move with it.

Assuming the feeding industry does move to the U.S., Canada’s beef export business would completely disappear. We would become exporters of live cattle not beef. Canada may not be able to provide enough finished cattle to supply our own domestic market. This could happen within the next five years.

Faced with the highly visible movement of large volumes of live cattle to the U.S., American cattle producers will successfully lobby their federal government for countervail and anti dumping legislation to further bolster their industry and protect them from Canadian imports. This will happen within 3 years.

I see some of the large feedlots disappearing and smaller 5000 head or less feedlots taking their place unless government programs continue to prop up the 100 or so big players presently operating in Alberta. Canada’s cattle herd will decline from its 2006 level of 15 million head to 10-11 million head, about the size it was before the Canada U.S. Trade Agreement (later NAFTA) was signed in 1989 and the removal of the Western Grain Transportation Act (Crow Rate Benefit) in 1995.

Within a period of 20 years (2009) the U.S. government will have successfully negated any advantage Canadian primary industries would have gained under the free trade agreement while maintaining unrestricted access to Canadian oil supplies.

See:
http://www.statcan.ca/english/freepub/23-012-XIE/23-012-XIE2006002.pdf

[rkaiser]

manifesto - business plan - press release - call it what you like farmer_son.

What do you think of it?