Forward Contracting Canola

[bigzee]

I've never done this before but with futures rising in last couple days, might make some sense to lock in some. With acres of canola and beans expected to rise, prices could be considerably lower come next fall. Today looking at around $10.70 Nov, which is a very nice starting price. What's others thinking?

[errolanderson]

November $500 puts trading for $18/MT today.

Nov strike price $500 - premium $18/MT = $482/MT ($10.93/bu) less fall delivered basis.

No production or delivery obligation . . . .

[blackpowder]

Agreed, or put spreads. Just dont let your basis ride forever.

[Oliver88]

That sounds like a good option to watch Errol.

BP could you show an example of a feasible put spread for canola?

[blackpowder]

I would love to. But too dumb and lazy. My broker does for me. Worked very well in wheat last year. Have to keep an eye on the spread price. Might post my latest spread info tonight if time. Done 2 wks ago. Price lower but cost of insurance $11.
Erroll?

[tubs]

locked some canola sept delivery 11.07

[Partners]

Canola to Yorkton at RP $11.19 for Dec..

[crusher]

For new crop, I'd recommend doing some sales that lock in a generous profit. You can start using put options after your percentage of crop sold starts making you nervous. Otherwise the option premiums will cut into your profits. Each to his own. Just do something. Not very often canola is over $500 off the combine.

[Braveheart]

Everyone's situation is different. These prices might be good for a start for some, but not enough for others. Personally, I'd like the seasonality of weather scares later on in May to kick in. Demand will remain strong so no concerns on that side.

[Guest]

done some dec for $11 , saw sept today for $10.87, nexera today with AOG WAS $12.49 on first 10bpa

[farming101]

It might have no bearing at all but I would want the Dec 6 high in RSX17 to fall before looking to far forward. If $515 falls the chances of a May/June high improve significantly. DYODD
Having said that it is very close, Dec 6 RSX hit $515. Today hit 513.90. Call it a technicality
Anyway fall basis is some areas is in the $40 to $50 range. Take off options premium and it don't look too good.
Nov 500 puts were 15.20 after the close.
Certainly a good recovery and a good place to do something as crusher said.
Unless you like to let it ride

[farmaholic]

I would think $11 would be a damn good starting point for canola this fall. I bet spot canola will be sold sub-$10 during "Harvest Happy Hour". I sold a little over 600 bushels I couldn't squeeze into the bins for $9.68 last fall.

[crusher]

So if Agriville is a good sample of farmers, then 50% will have sell orders at $11. Why don't you adjust your target to $10.95, merchants will pick those off first. Going forward it might be a challenge to get past $11 if there is all this hedge pressure.

[farmaholic]

....then ask for $11.05 and have them pick it at $11.....why do we always have to adjust our expectations?

Psychological perceptions

Hold out for a nickel and take a dollar less!

[Grahamp]

I really believe in situations like this where there is a number that everyone is attracted to you are better being below it by a bit say 10.75 or above it by a fair bit 11.5-11.75. If there is a ton of volume right at 11 they'll stay just under knowing that they have a lot of volume right at 11. However if they fill eveyone at 11 there can be a nice vacuum that can really move it up.