Markets

[charliep]

Markets have been interesting of late. My attention would be on the charts this time of year. Weather concerns seem to have put a floor in under prices for at least the moment. Always curious about peoples strategies.

[URL="http://www.farms.com/markets/?page=chart&sym=MWZ13"]Dec MGEX wheat[/URL]

<a href="http://www.farms.com/markets/?page=chart&sym=ZCZ13">Dec CBT corn</a>

<a href="http://www.farms.com/markets/?page=chart&sym=ZLZ13">Dec CBT soyoil</a>

<a href="http://www.farms.com/markets/?page=chart&sym=RSX13">Nov ICE canola</a>

[charliep]

One other chart and CGC numbers.

[URL="http://www.copaonline.net/documents/COPAWEEKLYAPRIL172013.pdf"]COPA[/URL]

<a href="http://www.grainscanada.gc.ca/statistics-statistiques/gsw-shg/2012-13/week-semaine-37/gsw-shg-01-eng.htm">Grain statistics weekly</a>

[farmaholic]

In a falling market... Dig in my heals
and ride it all the way to the bottom,
works every time.(Sorry Charlie)

Actually in new crop, only forward
priced some green peas with an AOG
clause, price was a good starting point.
Flax is also fairly attractive but
haven't prepriced any.

Old crop wheat is still all here except
the stuff I cleaned for seed. Hoping to
see 8 plus yet. Most other stuff is
sold or priced and still here.

[farmaholic]

In a falling market... Dig in my heals
and ride it all the way to the bottom,
works every time.(Sorry Charlie)

Actually in new crop, only forward
priced some green peas with an AOG
clause, price was a good starting point.
Flax is also fairly attractive but
haven't prepriced any.

Old crop wheat is still all here except
the stuff I cleaned for seed. Hoping to
see 8 plus yet. Most other stuff is
sold or priced and still here.

[malleefarmer]

were would the markets be without frost
snow and slow planting world wide.

be careful what you wish for this year i
sold more new seasons wheat yesterday at
$270 port basis which is $230 on farm
for me have sales at $307 port basis
done last november

also did a tiny parcel of canola
yesterday at $530 port which is $490 on
farm plus oil bonus which can add as
much as $25 per tonne some years

cheers

[jdepape]

I know the focus is on new crop but I think there's
a lot of money being left on the table with old
crop. About a third of the 2012 wheat crop and
about 20% of the canola crop is still on the farm.

Farmaholic is looking for $8.00 wheat.
Bucket is watching the weather and wondering
what good old crop wheat in the bin might be
worth if we indeed have a weather problem.
I know some guys that want to keep their grain in
the bin "in case I have a crop failure this year, I
will have something to sell".

I urge all to consider the current old crop / new
crop inverses in their marketing decisions.

Using average prices,

Spot spring wheat is about $7.83/bu
New crop is about $7.24
A 59 cent per bushel inverse.

Spot canola is about $14.46/bu
New crop is about $12.36
A $2.10 per bu inverse.

Carrying unsold grain through these inverses,
looking for higher prices, means new crop wheat
needs to rally 59 cents and canola needs to rally
2.10 per bu JUST FOR YOU TO BREAK EVEN
on the strategy.

If you're going to wait for a rally before selling, it
will potentially cost you a lot of money if you carry
old crop wheat or canola into new crop position.

Best approach is to sell the old crop cash grain -
all of it - before the end of the crop year (before
the inverse collapses). And, if you think the
market has upside potential, replace it with a long
new crop futures or option position. (in canola,
you might want to replace your physical stocks
with old crop futures first - could be some
fireworks yet.)

There's a saying in the grain trade: "Never, EVER,
EVER, carry inventory through an inverse." This
applies to farmers as well.

Drop me a line if you want to talk in more detail
about it.

John De Pape
john@depape.ca

[bucket]

The later the spring gets the wider the price will be between feed and food wheat.

Although there is also the caveat that the later the spring goes and the more normal the corn crop gets the later it will be harvested.

So what does the enduser do to cover his needs from the August 1 to september 30 time period?

A spring rally or feeding the inverse lowers the ending inventory and at this point that puts some crops to barely keeping the pipeline full.

Random thoughts.

[charliep]

Will let John answer questions but will note August and September are the months Northern Hemisphere winter wheat hits the market. Off markets for mid quality wheat are always well looked after at this point in time. Your play may be around protein but there is lots of old crop higher protein wheat around.

For interest sake, feed wheat prices in Southern Alerta are close to your $8/bu. Tight old crop corn supplies and delayed seeding may also create opportunities to ship feed wheat south in the period you talk about. Happened last year when Manitoba moved unit trains of winter wheat off the combine into the US feed wheat market.

I tend to agree with John but lots of stuff can happen ahead. Place your bets and take your chances if that is your risk management style.

[Burbert]

Ahh comon boys/girls by this time next
month, markets'll be talkin bin buster
crops round the world, lower and lower
prices. Who cares what Comedia produces,
Braaaaazilia, Argentiniiiii, the Black
Sea, Europe, Oz, India, and Chine kin feed
the world fer a change. Oh and yeah
Costco's got a lotta stuff to, eh. fsh&gr

[boarderbloke]

Not everybody has high quality wheat. This story from the U.K. about ethanol production slowing due to poor quality wheat supplies.

http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8278518

Also read another story the other day about some cracker plants, suspending production because of low quality wheat stocks in the U.K.

We have wheat here, high quality and protein and with low ocean freights, just SHOW US THE MONEY!

[bucket]

charliep

What winter wheat?

Last time I had a frost on a wheat crop, it was just a matter of going through the motions.

Talk is they may start baling the wheat crop down south for feed/hay, that farmers are also lacking because of the drought.

They can talk the winter wheat crop up all they want, but in about three weeks they will find out its not good.

It has froze all the way to texas and kansas, that can't be good.

[riders2010]

Where the heck is there 20% canola on the farm?

[boarderbloke]

Story on Bloomberg about record cold and spring frosts across southern and high plains.

[URL="http://www.bloomberg.com/news/2013-04-23/record-freeze-in-u-s-extending-wheat-crop-damage-commodities.html"]Record Freeze[/URL]

[boarderbloke]

Caught this on twitter(re cracker shutdown U.K.)

[URL="http://www.guardian.co.uk/business/2013/apr/22/weetabix-supplies-last-year-harvest"]Cracker Shutdown[/URL]

[charliep]

Your arguement is with the market - not me. If you believe the market is wrong, stay long. Just analyze what your business needs are including the ability to live with lower prices and your ability to cashflow/have extra bin space should it be necessary to hold into the fall.

I think I have said in the past high grade/protein wheat is the one crop I would carry into new crop. Not a guarantee of better price - just better opportunity.

If you follow wheat futures market spreads, spring wheat/MGEX has been the strongest market. SRW has been the weakest with conditions pretty darn favorable across the SE corner of the US.