Canola Pricing

[charliep]

Just a note to put people on alert on canola. Canola on its own has been starting to show some signs of bottoming - prior to today. Today soybeans have started crashing and this has potential to drag canola down more. Soybean futures have a lot of net long speculators who will bail. Similarly, Brazil/Argentina will start to price aggressively if they think the trend is lower (they have a monster crop that is just starting to be harvested).

If you are in a forced sale situation (need cash, end of a 90 day differed price contract, moisture level high, etc.), you had better be on alert with the idea of licking your wounds and selling. Those who have cash needs covered into the spring (storeable crop as well) can wait (no guarantees). Options traders can also be using this dip as an opportunity to buy calls (buy the lottery ticket on a weather rally - we're not out of the woods on any crop)

[dnach]

It is begining to be evident that canola will barely be a break even crop for '03, on most farms, unless your average yield is 30bus/ac or you have contracted a speacialty oil canola. The sad thing is that HRSW looks the same with the new PRO's, although they are lowballed.

[charliep]

What an interesting day. Soybean market gets pounded lower only to bounce higher. Maybe not dead yet but stay tuned. Soybeans have challenges ahead.

Watch how canola responds tommorrow. This may spur some buying/a bit of a bump in prices. Again, stay on alert.

[boone]

Charlie let us be glad that U.S. farmers in the corn and bean belt are navel gazers. They will always bid back up, something that seems in short supply in their own back yard. When you catch a small wave grab some.And hold on for the South American Tsunami.

[charliep]

Boone/anyone else

Any recent thoughts on soybeans. May is my interest. Bought a
CBT May 540 put at 8 cents and currently worth 3 3/4. Don't like to hold into the last month - time will work against me. Hold or lick my wounds?

[boone]

Charlie, looks like the only way to shift this market is one problem at a time. For the most part canola in farm stocks is held in strong hands (too strong for their own good it appears) however if cash flows from gov.programs and intended acres start to show up light keep powder dry for mid to late May. Against ever stronger dollar, South/Am,beans and a cagey importer, we'll need a fair strong wreck after that late june early july to bring ,s. Crop Ins. premiums are the next watch window for Sask. acres. Just my humble opinion.

[melvill]

Actually, boone, only some of it is in strong hands. Unfortunately, I'm getting one or two calls a week from farmers who still have from 50 to 80% of last year's seed and they're panicking about the price. The ones that would talk about it have machinery or land payments coming soon or they haven't revolved their operating loan yet so they're under quite a bit of pressure to move the seed at "fire sale" prices. One good sign, though, is that deferred basis prices are getting stronger again.