November Canola

[errolanderson]

Can you of Errol elaborate on January puts?
Future price is approaching $500.

Oliver . . . we bought Jan 500 (in-the-money) puts for $15.80/ MT today. Jan strike $500 - put premium (say $16/mt) for easy math = $484/MT ($11/bu) - your fall delivered basis. Advantage of Jan is it expires around Xmas. This allows the grower to watch for a narrower post harvest basis. Also, no production or delivery obligation. Pure ol insurance that the grower can manage without risk of cash contract payout penalty.

Note: Given the strong close today, these options may be cheaper tomorrow. But don’t nickel and dime this market as canola could suddenly drop once current sales are covered.

Puts are an added tool for a producer’s marketing toolbox. Part of a risk management plan. Hope this is useful.