Why sell???

[bucket]

I do not understand all these reports that say farmers are selling canola before the price drops furthur. If they have held the canola for this long why would they sell? It seems to me that by selling they are accelerating the downfall.

I don't care what the paper trading suits are doing - but why would farmers sell into a down market??

Would some one enlighten me, please???

[charliep]

I basically agree with you. A farmer who has been following a market plan and has a fair chunk sold doesn't need to panic. There are always 1 or 2 weather related market rallies during the summer although asking to return to recent highs may be asking a lot.

A farmer who has significant amounts of old crop to sell and will have to market to pay this spring bills is in a different situation. If I were in a must sell situation to cover this next month's seeding bills, then I would be on high alert if not selling.

The other thing to watch for will be extremely attractive basis levels/premiums as deliveries dry up due to road ban season, farmers busy getting ready for spring work and finally unattractive prices. I wouldn't necessarily by pass the opportunity to sell cash to lock in a basis and buy futures to participate in a rally. You will need to consider risk and all the jitters everyone seems to be feeling about the unknowns of the current market.

[craig]

Couple of other things to consider. The heavy fund involvement has major ramifications for commodity futures. I think a lot of people are questioning just how far the market has gone away from basic market fundamentals. Add to that a dropping U.S. dollar and continued talk about recession and you have factors in play outside the ag market.Can you blame farmers for selling at a price that would have been considered the high of the market in December. I guess the other question you ask is why should farmers be anymore disciplined than any other player in the market.

[SASKFARMER3]

The suits and their advise got us into this mess. Yea sell on the down side when Even if the US grows a huge crop it will just be enough to satisfy needs and not replenish stocks. So does one who farms and understands weather believe that mother nature will give the entire world a bumper crop to help us tilt the supply demand tables. Well the answer is NO. Mother nature will screw up a crop somewhere in the world probably Canada but that's another topic. We will hold now till June or July should shake out by then. Buy on the Down. Fundamentals haven't changed Just some folks are getting cleaned.

[bucket]

Here's the other part of the equation. If fertilizer and fuel are commodities why are they not dropping lock step with grain???

PLEASE oh great ones enlighten me as to why farmers keep getting screwed????

[cottonpicken]

Fundamentals have not changed.
They have in fact gotten stronger.
Us dollar down
Interest rates down
Gold up
Oil up
Rising uncertainy
Increased volitility

The only thing better than farming would be owning a junior mining or oil company-thanks to the stock market you can direct your built up rrsp contributions into either or.
The fun part is picking the BIG winners.

[boarderbloke]

cotton, what's making me very uncomfortable is the movement of the Can $, in the last three weeks, the the Euro has gone up vs. the US $ from 1.4815 to 1.5755. the Yen has gone up vs. the US $ from 9252 to 10299, all the while the Can $ has moved down vs. the US $ from 1.0290 to 1.0017. Our Can $ has lost big time vs. the euro and the yen, yet commodities are also down. Canadian canola to Japan is much cheaper than it was three weeks ago, and peas & flax to Euorpe are also much cheaper???

[cottonpicken]

Yes,that is a bit odd.
The only things that i can think of are
-were debasing faster than the us
-the manufacturing hit were about to take will cause the feds to turn even more socialist and the robbing of the resource rich west(peter) to pay poor old east(paul) will excelerate.Hence the "new energy accord"-with pictures of harper driving out of calgary on a bus giving the finger to a mob of angery albertans
-or its a big old head fake
-or all three

My money is on all three.

If your really wondering about the price of grain PLEASE go to barcharts.com,scroll down to crude oil,scrool right and click on c(charts),then you should have daily charts,Then click on monthly charts(the ten year chart),Then look at january 2007.Crude fell off its high and hit a bottom of 49.20.Greatest buying oppurtunity in a long while.

14 months later- a cool 100% return.

14 months from now do you really think canola will be under 600$ a tonne?