Why is their a $3 inverse in Canola yet Soy is $1?

[SASKFARMER3]

Errol or Charlie I have a question for you two. Why in Canada does the retarded sister have a $3 inverse to fall and in the USofA Soy has a $1.
"Anyone who is buying grain, whether it's an elevator, a crusher, anything like that, the last thing in the world they want to do is end up holding onto more inventory at these prices than you need to because they're going to have much, much cheaper supplies available coming off in a few months," said Driedger.
So is the reason that our crop is so out to lunch for fall simply, farmers are easy marks. Professionals tell farmers all year its a huge crop coming etc etc. Then come fall farmers sell to cover cash flow with canola at lower prices thus supplying crushers etc with supply. Easy pickings!
BS crop reports BS yield results BS BS BS.
Why not for once tell the industry to F%^k off and sell oats or barley or HRS etc for cash and leave your bins locked. They will pay.

[SASKFARMER3]

Demand is their! Yes the supply will be available come fall. But why the $3 drop and not the $1. Or is it like Fertilizer chem etc all cheaper for the USA farmer.

[boarderbloke]

SF3, just thinking the new crop fall bean prices might still be strong because the market is still trying to seduce bean plantings, as the planting window is still open there. Higher prices being offered to get them to mud in a few more acres, the market is trying to make it worth their while. Here in Canada, the canola planting window is closed really, sure it can be physically planted, but what yeild will it bring, canola planted in June?

[SASKFARMER3]

I agree with some of what your saying but Some of my largest Canola crops have been seeded last week of May till June 5. Big seed big crops.

[Partners]

With that inverse, I would think that no one is forward pricing..

[charliep]

Just curious as to where you are getting your prices from. July canola is about $645/tonne. November about $570. The old crop basis in the company I look up was $5 over July (likely can do better) and the new crop basis about $10 under November. You old/new crop spread is about just over $90/tonne ($2/bu). You are about $15.20/bu on July soybeans and $13 ish on November. About $80/tonne if you prefer. I haven't looked up soybean basis in the US but I suspect will have weaker new crop levels just like canola. The source of your inverse in product values is meal with soyoil holding at 48 cents/lb.

Crush margins are a good indicator of the switch between old and new crop values. Yes the old crop market is reflecting the minimal carryovers on July 31.

[URL="http://www.copaonline.net/documents/COPAWEEKLYMAY292013.pdf"]COPA[/URL]

Again I highlight we need to watch what crops grain companies prioritize for sales/movement off the combine. The GMO wheat challenges may tie in as south east Asian countries diversify their sources of high end bread quality wheats. It may be a year when wheat moves early and canola later.

[boarderbloke]

Looking at the futures prices, beans are $2/bus less on NOV13 than JULY13.
Canola is $71.70/t ($1.63)less NOV13 vs. JULY13
Not sure what numbers you are looking at, are they after basis???

[boarderbloke]

Meant the above for SF3

[charliep]

I will stand as accused on the pricing front. New crop is about $12.70/bu. Do I sell today? Maybe not but my trigger would be itchy for some portion of the crop I felt comfortable of taking off this fall. Give me a sniff at something at closer to $13under todays market information and I'm a trigger puller. I also like option strategies (puts). But I am not a risk taker.

I noted you comments highlighting the price benefit of storing grain this past year again. Do you include carry (interest and storage) as well storage risk (heating) in comparing when to sell and benefit. Last fall, you could have had $600/tonne with patience. I would want a minimum of 1 % per month increase in value to justify storing. So my $600 in October would have to turn into $630 expectation to warrant storing or it wouldn't be worthwhile. Just my thoughts

[errolanderson]

Old crop / new crop bid spread could
narrow in July once demand for old crop
fades and farm deliveries pick-up.
Carryout come July 31, we believe may
exceed 550,000 MT in our opinion. Snug,
but not exceptional.

There is still a reasonable amount of
canola left unpriced in bins (IMO).
Remember, canola demand in June
typically slows, plus squirreled-away
canola may appear in the cash market.

July canola volatility ahead . . . .

[SASKFARMER3]

Selling some of that stored today for 646 plus 35 basis is $15.44 vs 13.60 (your 600) last fall. Now the rest will play with till June Basis in hand. Your feeding the Giant, My question is Why let them come for it not give it to them.

[fjlip]

Pioneer is offering -13.43 basis off Nov, is that anything to lock in?

[jdepape]

July/Nov canola is equal to $1.58 over
July/Nov soybeans is $2.06 over

Soybeans have the bigger new crop "discount" to old crop.

What am I missing?

[jdepape]

New crop canola is actually on the high side. The supply side of the balance sheet is a bit tenuous - one of the smallest carry-ins we've ever seen and now seeding problems.

This scenario is showing up already in both new crop basis and spreads. Some new crop basis levels are north of $10 under; Nov/Jan at practically even money and deferred spreads are at inverses.

The market is expecting continued tightness and it shows.

[jdepape]

By the way - when I say a basis is "north of 10 under" I mean higher - like 5 under. As in it gives a higher price.

Basis is a price, not a cost.