Buyers going off July canola futures instead of May

[Oilking]

Well, May futures is about 7 bucks/tonne more than July. Why are they going off the July right now? May shouldn't even show up if they aren't going to use it.

[farmaholic]

Hahahaha.........

[farming101]

April 21 was last trading day for May options. I actually thought they might have switched before now

[Oilking]

What a crooked system and what a joke! Nov is trading at $ 495/tonne right now. They might as well use that month if May is too much. Bins are locked now for sure on my last few loads I got left

[farming101]

An appropriate basis adjustment will keep buyers from paying too much. Doesn't much matter which month they're buying off.
Locking in an attractive basis close to a front month roll can work quite well some times
Depends how important it is to get the stuff off the farm

[farmaholic]

Shouldn't we have been able to price against May up to the last trading (business) day before the 15th? Which is the twelfth of May this year.

But what would be wrong with pricing against May with a negotiated basis for deferred delivery to June/July/early August?

[Oilking]

Exactly farmaholic, it really pisses me off

[farming101]

It would be a rare thing to enter a new trade in a month that is in delivery.
Who would take the other side?

Notice in May 2016 how fast the open interest dropped off.

[farmaholic]

......and what's wrong with plan?

[farming101]

What would the negotiated basis be is the question I guess, and then how would you capitalize on that so that you don't miss out on possible further price increases as it gets near your delivery date.

This happens all the time. Lock in a price then later price goes way up and your sitting in the lineup with another guy who is getting a buck a bushel more than you. Not sure how pricing off a dated futures month is going to get around that

Maybe the short response should have been "I dunno"

[Oilking]

Farming101, so what is the point then of Ice futures posting the May contract if farmers cannot price based off of it. It's completely useless and irrelevant then. We shouldn't have to look at it then

[farmaholic]

101, to me its a deferred delivery contract. No matter how you price, someone in the line up could have gotten a better price after you priced yours, or a poorer price.

I know what I'm getting when I signed the DDC and that is good enough for me.

To me, signing basis or futures first has only transferred all, or the rest of the risk to you. Marriage can be an ugly arrangement.

It is obvious you have a way better handle on the tools in the tool box than I, so maybe my response should be, I dusn't know!

[farming101]

Some who have an open position may want to take or make delivery against the contract because it would mean a profit for them. Every one else has retired or rolled their positions.

Delivery assignments for futures positions can begin once you enter the delivery month for a given contract. Typically, the oldest outstanding position is selected to match the delivery request.

[URL="http://futures.tradingcharts.com/tafm/tafm10.html"]http://futures.tradingcharts.com/tafm/tafm10.html[/URL]
[URL="http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis10948"]http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis10948[/URL]

[farming101]

I mentioned a bit ago that we did a zero basis contract on April 17 for July delivery. This stuff has got to be gone so we're okay with locking it in.
Since then the basis widened out $10. So we don't have to worry about that.

Beware if the price skyrockets the basis will take away some of that price appreciation
I've seen it too many times.

[bucket]

Until you have an active spot delivery market working ....no one knows if you are getting fair value for the deferred or basis contracts IMHO.....some may disagree but for an open market to work you need to know if it pays to have bins....once again IMHO. ..

I like spot delivery ....the extra expense of options and waiting to know if you will deliver in the contract period isn't worth the headache.

I know guys that had January wheat contracts that were not delivered to pay his bills ....not a fun feeling for him and sfa he could do about it.