Email from a grain buyer

[Klause]

2012
· A year ago today (June 19, 2012) was the day when the December 2012 corn contract finally managed to trade through $5.50/bu (was at/below $5/bu in Jan) and to begin a nearly non-stop rally toward an eventual high of $8.49 in July.
· On Jan 1, 2012 the Nov 12 Canola futures closed at $500/mt, it proceeded to go up as South America's drought intensified which resulted in them producing a smaller crop, then the 50 year drought in the US pushed prices even higher
· Those two droughts were the main factors for the prices rising and funds jumping in buying futures and options
· The 2012 canola futures high was $655/mt which occurred during the summer when beans hit $17/bus and when corn was over $8/bus

2013
Ø the difference in 2013 is South America has already produced a bumper crop
Ø If the US produces a bumper crop which they have the moisture to do we could very well see canola futures at $500/mt
Ø So the reality is those that don't forward price might be in for a bad surprise
Ø Canola basis levels for harvest delivery are historically narrow
Ø Use Min price contracts where needed, we have been in a bullish market for 18 months now and on the verge of new crop production with little to no major global growing areas at risk,
Ø We may also see weather scares as those are normal

Generally the longer people wait to see their own crop become more established the less uncertainty and therefore the less weather market premium stays in the market. When that happens you may very well see lower futures because the risk premium has decreased. When coming off a period of high prices its not good to hope for what we had but you need to evaluate the current situation and determine what is good now for prices and cash flow and bin space. Having some plans in place for new crop are crucial in the new environment.

[Hopperbin]

true every year is different but i am sure can
learn from the past like separating trueth
frombull shit sometimes hard to tell. my
opinion is new crop.prices have a bumper world
crop worked into them. i would not get too
excited. if it is profitable then book it. just if
the great white combine gets to the field before
then buying out one sided contracts can suck in
my opinion. insurance can bedont do too
much or get the buyer to give act of god

[Hopperbin]

since it is coming from a grain buyer who has
taken all risk out of the transaction for himself.
indicates craftiness in convincing a grower to
sell.

[Hopperbin]

since it is coming from a grain buyer who has
taken all risk out of the transaction for himself.
indicates craftiness in convincing a grower to
sell.

[charliep]

Another perspective.

[URL="http://www.agweb.com/markets/agweb_hedge_position_monitor.aspx?smartid=ZZZZZZLZ 11Z2Z21ZZZZZZZZZZZ&spMailingID=41843385&spUserID=M zYxMzYzNzMwMQS2&spJobID=191955991&spReportId=MTkxO TU1OTkxS0"]Agweb[/URL]

[boarderbloke]

Not sure how things are across the prairies, but we're quite late here in SESK, and with all the moisture and more forecast, I don't think we'll have a very early harvest. I think there's a high risk of frost for us this year.

[HappyFarmer]

Still a long way from making a crop or
losing one, but would have to argue that
TODAY we are going to see significant
increase in the amount of grain
available to the world over last year.
To me 550 canola puts @ $16/mt. After
commissions i am protecting my self with
a floor futures price of $531/mt and i
don't have to lock in a bunch of canola
that i am worried that i am not going to
get. If i'm wrong and the market goes
higher, great, i'm still in the money.
Spring wheat $8.05 puts at .55/bushel
arn't the same bang for your buck but a
7.50 floor futures price is maybe not
that bad either.

[freewheat]

No one, and I mean NO ONE, has any clue as to what will happen with
the markets.

As farmers, we need to be careful, cover ourselves for risk, yet not
be dumb and follow any "leader" off a cliff of insanity.

[hobbyfrmr]

I agree with hopper second post and
happyfarmer. Happy bought himself a floor
price.without commiting production volume.

[sewen]

That's strange I got the same email and I live in a
different province, hmmmm??

[cottonpicken]

Yes we do freewheat,but like predicting the weather
the goal is to be right more often than not.

Why are those options so cheap?An easy sell or hard?
Somebody is on the other side of EVERY SINGLE
TRADE.

[hobbyfrmr]

Yes cotton there are 2 sides of every trade bit i
like options purchase over signing a contract
with a kine company.whrn i have no tangible
inventory.

[hobbyfrmr]

Sorry for spelling errors. All thumbs.

[Klause]

sewen, this email is from Ray B. in Manitoba

[Choice2U]

Same email out of Balgonie grain buyer. I guess they are just putting their name on a company written piece.