Anyone Hedging Dollars?

[Grahamp]

So a pretty negative farm economy is being propped up by a dropping dollar. I was wondering if anyone is starting to hedge dollars? I have locked in more basis contracts then I ever have before, and have presold a fair bit of canola trying to take advantage of the weak loonie, but I haven't hedged any dollars. Curious if anyone has pulled the trigger and what tools they are using to do this.

[FarmRanger]

Are you hedging with a possible recovery of the Canadian $ in mind? Basis contracts would be a good way of doing that. You can also hedge $100K at a time with a broker.

I'd be a little hesitant to go long Canadian $ right now though. My own personal opinion is that theres a lot more downside potential than upside.
Oil in the basement, tax and spend Trudeau in Ottawa, clueless NDP in Alberta and Libs in Ontario. Scary times.

[wheatsnowcanola]

Yes. Hedging just like argentine farmers. Selling grain only when you have a bill to pay. Money value keeps dropping, grain does not. (At least wheat)

[tmyrfield]

by doing basis contracts now is a kind of a synthetic hedge. you are locking in the basis now you are locking in a low dollar in the hopes it will rise by the time you deliver your grain.If dollar keeps dropping and basis levels follow and get stronger it would cost you a bit of money (price left on the table). If opposite occurs then you would be ahead.
If i am correct in my way of thinking being long in commodities now is like being short cdn dollar. The only fly in the ointment would be if grains start crashing like oil. then i am not sure if you would want to be in front of that freight train. sometimes doing nothing is an alternative.

[Oliver88]

Are you hedging with a possible recovery of the Canadian $ in mind? Basis contracts would be a good way of doing that. You can also hedge $100K at a time with a broker.

I'd be a little hesitant to go long Canadian $ right now though. My own personal opinion is that theres a lot more downside potential than upside.
Oil in the basement, tax and spend Trudeau in Ottawa, clueless NDP in Alberta and Libs in Ontario. Scary times.

I agree with this and think there is more downside while the Saudis, Venezuala, US, Canada, Russia, etc play a game of chicken with their oil production.

$20 WTI = 62 cent dollar????
$25 WTI = 66 cent dollar???

[iceman]

Negative ghost rider

With Justin and Notley playing grab A$$ and the BOC talking about another rate cut the loonie is only going one way. At some point it will be a good trade but the move needs to be confirmed first. So what if you leave a few cents on the table.

Proceeding to exit 62C Out

[MBgrower]

3 events to watch this year to push the cdn dollar even lower

Vancouver and toronto housing market begins to correct

Canadian interest rates going lower

Usa interest rates going up.

[ajl]

I bought $US on election day and it hit my 0.69 target this week so the hedge was lifted. I think we may see a rally because usually moves are not in a straight line and oil prices usually rise in spring. Also a good cold snap could move the oil price higher in the short run. Another factor is a slowing US economy which may slow the rise in $USDX. So I am looking for a rally to closer to 0.80 at which time I will go short Cdn again as I am sure we will see even lower levels at some point.

[farming101]

Could be a correction/pullback here but the trend is clear

[sumdumguy]

Does anyone else have a better way to protect your long-term dollars, both receivables or payables? Is there another way to protect your position?

Currency risk has turned many a deal into a disaster.

I am sure we can all think of many small companies that didn't think to lock in a high Canadian dollar, but made sales on the basis of a par dollar. Now the chickens have come to roost. How do you not hedge your positions and sleep at night?

[cottonpicken]

I'd use an etf. It would be a taxable loss trade if things went south plus it's easy peasy and leveraged if you want

[TOM4CWB]

Buying CDN$ puts is a low risk way to hedge.

Learning not to be greedy... and actually reduce risk... is an interesting educational process.

Few are prepared to do the time... and learn the skill.

[iceman]

Thomas are you saying to buy puts now? Like on Sunday night?
Nothing against buying puts but it seems like that goose left the plane along time ago

Iceman out

[TOM4CWB]

Iceman,

It was crystal clear when the US Fed was raising interest rates... what was up[US$]. Buying CDN$Puts at that point was a no brainer.

If the BOC is lowering interest rates[on top]... and the US Fed continues to raise US rates... PLUS Iran has the 150B$ given to them by the US[which is a foregone conclusion now] Iran will be pumping 400,000-600,000B more oil; we are headed much lower than the .69$CDN now. It sure looks like the perfect storm...

[cottonpicken]

I'd use an etf. It would be a taxable loss trade if things went south plus it's easy peasy and leveraged if you want