When is the best time to sell your canola

[Hopperbin]

There could be a reduction in planted area next year also if feed grains hold up and I don't see them dropping any time soon. So canola may need to buy the acres this spring. How is the ethanol consumption doing Charlie? USA and Canada. Dupond trying their best to sell me a new variety of RR I have not purchased seed yet. Hard to figure with the buffet of programs and discounts but the price is around 7 bucks a pound. Since our futures tend to be a mixture of Soy meal and soy oil price how much upside of futures can we get to? The crush plants were built cause there was lots of profit and cause someone wants the oil and meal in my opinion.

[charliep]

Lots of questions that are relevant and have me scratching my head for next week.

I think western Canadian farmers will have lots of opportunities in all crops next year. That means a good year to warm up your budgets and look at agronomics issues like crop rotation.

My poker big picture ideas.

Oilseeds will continue to have the strongest demand outlook unless everything goes to hell in hand basket. I think we could grow a 15 MMT canola crop in 2013 with minimal impact on prices. Will we do it? No idea.

Feedgrains are crops at most risk right now. Will get yelled out for putting out big numbers early but 100 million acres of US and 160 bu yields combined with a North American livestock industry that is dropping in numbers and a world market that will feed other things than US corn/the signals to increase production. You will have to tell me how barley fits in your rotations/budgets. Ethanol will be there next year but reduced fuel demand/risks of reviewed mandates add uncertainty.

Wheat is the biggest wild card in my mind at the moment. Lots of interesting stuff bubbling around the world at present but North America has yet to kick in in terms of exports. The world has the ability to kick up wheat production with caveat most Northern Hemisphere wheat is winter/already planted.

Nothing really exciting on the pulses except will be a follower. What gets me excited is the growin market in China and some of the new uses in North America as a health product. They may be the next cinderella crop.

[cottonpicken]

How much rain needs to fall from here till harvest to
hit 160,with sub soil at or near 0?

Not being a smart ass would really like to know a ball
park figure.

[bucket]

charliep

I don't think 160 bpa is in the cards. The US is very moisture short, basically it would have to rain every third day after seeding to make a crop like that. Basically what happened to us in 2010 to make a huge corn crop.

Might 140 bpa average to start the 2013 US corn crop at.

[charliep]

You may be right. 160 bu/acre is a trend yield. Regardless you are talking a 13 to 14 billion bu crop with a 160 bu crop about 14.5 billion bu crop. A long ways to seeding.

[bucket]

charliep

The corn crop may be completely used up by next harvest. Remember that these early harvests in the states don't mean huge crops and it allows the usda to technically borrow crop from the next year. Fudging carryout from using early harvested crops.

If a trend line yield comes in, that pushes harvest later and the pipeline becomes empty.

What the US corn pipeline holds is beyond my knowledge, but it may do what canola has the last couple years and push some great prices at harvest to get farmers delivering asap.

[charliep]

All the things you say could come true. Even with canola this past year however, the nearby contract stayed relatively flat with a trading range of $600 ish to $650/tonne March to the current day. Your assumption is no one looks at the supply demand tables and the that no rationing of supplies is occurring. To some extent you are right on canola but I suspect the market will change fairly quickly this spring to prioritize elevator capacity and sales to wheat. The markets function is to match up what is available for supplies with customers ability to pay/substitute other crops.

Your and others assumptions are we are going to have crop production problems this spring starting with South America and going to the US. You may be right. You could be wrong as well with above average production and a customer base that has shrunk to reflect current high prices.

The topic is when to sell and should everyone hold off. Things are tight enough that it may work. Having said, I would look at the inverses in the market and think about what they mean/how to use them. I have to use opportunities that market provides because I learned a long time ago I am not smarter than the market.

[charliep]

Here is a monthly canola chart to look at. You can place your cursor over the contract highs and lows to determine months/values. The market does not peak every year in March.

<a href="http://www.farms.com/markets/?page=chart&sym=RSX12&domain=farms&display_ice=1&s tudies=Volume;&cancelstudy=&a=M">ICE Canola Monthly</a>

[dirtgirl]

Charlie,
What do you think of selling remaining old crop
canola and replacing with a July 13 soybean call
spread? Something like a 15 to 18 spread.

[dirtgirl]

Lesm,
Do you know if those monthly prices are net of
futures and basis? I tried to find that info on the
canola council website but the closest I can find is
a yearly avg price. I know that historically basis is
usually the best May-August and that goes a long
way to explaining why on avg best price is
achieved then. If your number of may-aug being
best price 64% of the time happened to be based
on futures alone then the prices would look even
better after adjusting for basis. A may-aug canola
marketing plan would be incredibly simple and
effective!!

Of course the market inverse could be telling us to
do something different this year!

[lesm]

Dirtgirl,got this info from
www.canolacouncil.org/markets-
stats/statistics/current-canola-oil,
-meal,-and-seed-prices
Prices are calculated basis in store
pacific coast.

[dirtgirl]

Thanks Lesm!

[charliep]

I would likely need a little more information about your strategy (i.e. are you putting a spread on between the two strike prices) but in general sounds like a good way of going to capture any potential spring/summer rally. I might be a bit patient in buying the calls - let this market play out a bit. I might also wait a little while to pull the trigger on canola. The charts make me nervous but I suspect patience will net out a better price (combination of both futures and basis). You don't need to do both at once. Try to sell canola on a rally and buy the call on a dip.

[charliep]

Way down the list but would be nice to get some other perspectives.

Things that are on my radar.

When you turn off all the market chatter and just look at the soybean, soybean oil and canola charts, what are they trying to tell us about prices direction today (tomorrow may be different). Carry between futures months. Trading volume and open interest.

There is lots of reason to be bullish about the oilseed complex and yet prices are sitting on chart support areas with a risk they will crack them in the short term. What are we missing? Would a further price decline bring on buying/begin the next leg higher or a sign of some bigger problems on the demand side?

Seasonality would suggest higher prices late winter with the spring dependent on South America/US soybean seeded acreage expectations. From my thinking, I would have some clear pricing targets and sell when achieved. I wouldn't do any replacement strategy unless there are clear signals the market is headed higher.