$#@!$**^%$ Canola Market

[countryguy]

I don't know how much more of this I can take!!Just where is this market going to bottom already?Does anyone have a decent old crop strategy from here on?

PS I think someone in this room owes Charlie a smorgasborg dinner!!

[henbent]

Countryguy,

I was at a growers meeting the other day, and a grain company rep told us that the commercial buyers are jammed up with a bunch of canola with green seed in it. They are having one heck of a time trying to move it or blend it because of the poor quality, and are worried about being stuck with it. Somebody suggested the bio-diesel industry could use it, the problem is that the industry is in Europe, they won't touch our canola, because of the GM content.

[henbent]

NOPA was not kind to the soybean complex this afteroon. Overnight Eurex trade has beans off 5 cents, pointing to a lower opening tomorrow.

Canola is 12% of the world vegetable complex and we cannot affect prices today the way we did in 1976, 1981, 1984 and 1994. Dont even get me started about 1994.

If you passed at $10.40, $10.00, $9.00 and $8.50, where are you going to pull the trigger?

Not trying to be a smartass, just wondering when and if the next wave of selling will hit. I've been told by many farmers that if it breaks through $8.00 they are giving up - that was the trigger when they seeded.

[rain]

Take a 0 basis to 3 over Calgary region and buy an July Canola call. It always amazes me why we hold the physical, when there is less risky moves.

[rain]

Countryguy: you wouldn't be referring to me about dinner for charliep. Old Charlie caught me in a weak moment and said canola woould hit $7.00 again before it hid $12.00 like I said with my loose lip. We are along ways from $7 right now but even further away from $12.

But don't give in boys, if you don't need the cash we are going for a ride up soon. Don't ask me how I know because all my marketing information is confidential. Just like the CWB.

Say Charlie if you are coming to Camrose let me know and I'll buy dinner anyway.

[charliep]

The market still hasn't hit $7/bu yet and I think still a ways off. CBT soybean oil seems (to date) to be holding support at 20 cents/lb with some good buying when it comes down this low. As well, I don't know if $7/bu will cut it when compared to other grain alternatives and continued risk from low sub soil moisture this spring (market needs to provide incentive for extra acres).

Quality issues remain in the forefront and I think the comment about green is relevent. I don't know where to find out about quality of the product in the system. I hope all your neighbors are well aware of the moisture content of their stored crop and are checking regularly.

Depending on basis (we said zero didn't we Kernel), I think we are stuck in the $8 to $9/bu area on old crop and $7.50 to $8.50/bu area on new (zero basis).

The ever ready bunny that continues to amaze me is the soybean market. A monster South American crop is already in the process of being harvested and prices remain high. Demand side continues to chew through a lot of product. Watch this one.

Kernel - I will keep your offer in mind/call you in Camrose if I am through. We would have to go Dutch as the story has yet to be told.

[melvill]

There is one thing that continues to amaze me and that is how gullible so many producers are - sorry guys and gals.

Had a phone call from a canola grower the other day. He and his brothers have all of last year's canola crop still in the bin - over 50,000 bushels of No.1 seed. He got a phone call from a grainco offering $10.21/bu. for the whole thing delivered 25 miles away. Of course he had to consult the other members of the clan and wait for their answer. The answer took two or three days while the clan consulted with the community at the local coffee shop. The clan learned that canola was definitely going to $11 so voted not to move any 'till it gets there.

He (and the clan) still have all 50,000 bushels and they've been offered just over $8/bu. by the same grainco.

Sadly, over the years in this job I've heard this story over and over and over again.

I asked the clan what kind of market info and analysis the clan's farm received. His answer was the "the farm press and the elevator manager". Quality farm market info wasn't saying that canola couldn't go to $11 but it was saying to spread the risk by not trying to aim for the market peak.

Now the clan is incredibly stressed because they have big payments to make in the next month or so. They're hardly speaking to each other. How can a farm run in that environment?

The lessons: Don't take guidance from Coffee Row University, rein in the "hit for a home run" idea for every marketing decision and pay for decent market analysis. Not even Wayne Gretzky scored with every shot on net.