So why should we grow Canola this Year!

[cottonpicken]

Kick me in the nuts and call me sue but in todays
markets worrying about basis is like"picking up
pennies in front of a bulldozer",unless you think the
true valuation of a bushel of canola is equal to a mc
happy meal.

[Burbert]

Bullsh-t rules, markets are manipulated at
the speed of electricity, usin computin
machines boys/girls! fharperenritz eh...

[charliep]

I guess the definition of pennies varies. The variation
in daily cash prices (read basis) between companies is
about $10/tonne but has been over $20/tonne. This
statement has to be put in the context of what your
canola is worth at the bin including differences
between companies in terms of grade, dockage,
trucking costs, etc.

The variation in basis within the same companies has
been over $25/tonne between the strongest and
weakest basis. The current variation in basis between
old and new crop is $45/tonne plus.

I come back to highlight the recommendation to sign
a basis contract is your market based on your cash
flow needs is to sell canola off the combine. There is
no choice this fall. If you are planning on selling 200
tonnes in October, improving your basis by
$10/tonne adds $2,000 to your bottom line. I guess
only pennies for farmer but someone I would try
given there is no cost to this decision except perhaps
opportunity cost of a better basis this fall. Assuming
on May 11 you will not get a crop is another question
but then I would ask why you are even bothering to
seed or perhaps to the question of this whole thread,
why are you not growing something else that
provides better profit potential for lower risk.

[jdepape]

Cottonpicken:

I disagree that watching basis is a waste of time.

This year lots of guys sold wheat off the combine
and got what they figured was a decent price.
They never noticed that the basis was 1.60 under.
Had they managed things a bit differently, they
could have sold a 20 under basis (or better).

I don't know about you, but I'm pretty sure that
1.40 a bushel is real money to most guys.

Basis and futures are two different markets - that
respond to different market influences.
Sometimes futures are moving higher when basis
is moving lower. The best marketing results come
from assessing them separately and acting on
them separately.

I've started a pricing program for farmers - this
year (so far), on spring wheat we have an
average futures hedge of 9.15/bu and our advice
on basis resulted in basis sales in the
neighbourhood of 20 under, depending on where
you are.

That works out to $1.07 over the average cash
price for the year.

In fact, separating basis and futures decisions is
the only way you would have gotten that kind of
price for the whole crop year.

One place where I would agree with your
comment about basis is this. I've seen a lot of
guys piss away over a buck a bushel in flat price
waiting for an extra dime in basis. Having a focus
on just basis just doesn't work (so, if that's what
you're saying, I'd agree with you.) You should
have a plan on both basis and futures.

If you want to see the details of what we're doing -
we have a policy of full disclosure - drop me an
email.

john@depape.ca