Canola markets

[furrowtickler]

I'm not sure how the canola market is even functioning right now. Who in their right mind would be selling or speculating? Bad areas are pretty well pooched, good areas are a lot closer to being cooked every day that goes by and the really good areas aren't out of the woods yet. There is a point where rain wont help anymore and I think for canola that day is likely within this week.

Yup agree

[makar]

And the reps think i am beyond stupid when i say i never forward contract.

[jazz]

And the reps think i am beyond stupid when i say i never forward contract.

I said 2 months ago the FOMO was intense this yr.

Cancelling a canola contract might be less expensive than losing land or tell your banker you can't make the pmts.

[woodland]

Makar you’re not alone in those thoughts……….

[Livewire]

Makar you’re not alone in those thoughts……….

In effect it’s selling something that you don’t have and maybe should be illegal. And those doing it this year may be about to find out why in a big way.

[helmsdale]

In effect it’s selling something that you don’t have and maybe should be illegal. And those doing it this year may be about to find out why in a big way.

It's basically a naked short. I'm not a market guru, but could you buy an option for security? 101? Any idea on cost earlier this spring?

[TOM4CWB]

It's basically a naked short. I'm not a market guru, but could you buy an option for security? 101? Any idea on cost earlier this spring?

I did some flat pricing at $615 Jan/Feb... bought $575 puts that were $21/t. That puts Nov21 Call options $655 strike at $21 as well. Hindsight is 2020.

Today at the money [futures $904/t] options [$900 strike] Nov21 Canola puts were approx. $96/t; about $80/t for $860 puts, about $40/t out of the money.
Sold $760 puts that were $31/t. The Volatility is crazy.

Cheers

[farming101]

On October 6, 2020 Nov21 520 calls were trading at 19.80/t. Yesterday they were at 397.20
November 16 they were 24.60
November 30 20.50
December 21 24.20
February 2 45.30
February 9 57.10

From there they never looked back. Volatility factor is crazy. IV yesterday in the Nov21 was 53.64%!
You need walkin' around money like Jed Clampett

[Rareearth]

If your a naked short, and want to get covered calls are the way.
If prices go up ( futures) the call should be worth more. Depends on volatility, strick price and the month. This hind sight was the correct move, even when futures have been at the historic high end —- but not to forget the risk of major western north america drought. Plus still risk of other weather issues.

[errolanderson]

Our canola production hard hit, but our export market / demand is apt to also slide in new crop year. In other words, the entire Cdn canola engine will be smaller over the next year (IMO).

Overall global veg oil production is actually forecast higher this coming year led by sharp gains in sunflower oil plus production gains in Ukraine and Australia. Soyoil prices might slide toward 50 cents/lb over the next few weeks/months according to international analysts.

Canola prices and demand still have to fit into the global supply/demand . . . .

[LWeber]

On October 6, 2020 Nov21 520 calls were trading at 19.80/t. Yesterday they were at 397.20
November 16 they were 24.60
November 30 20.50
December 21 24.20
February 2 45.30
February 9 57.10

From there they never looked back. Volatility factor is crazy. IV yesterday in the Nov21 was 53.64%!
You need walkin' around money like Jed Clampett

I don't ever remember implied volatility this high going back to 1991

[jazz]

I am reading errols article in the WP about Ukraine stepping in to try and take market share.

That was always my fear about high prices. EU is one of our major customers other wise we are going to be stuck with china as our only buyer and that sucks.

you would think we have some trade reps out there trying to salvage this market. Maybe some incentives from the seed cos so farmers might take a shot again next yr because if we don't that market could be gone for good.

[poorboy]

For those buying the contracts out remember that the basis may have increased by $1-2/bus by the time this is all done. A call or put won't help you with the basis buy out.

Most marketing guru's seem to forget all about the basis value change when they are advising forward crop sales.

Hopefully a lack of canola doesn't chase our customers to another product and they forget to come back.

[Sheepwheat]

So with the planned new crushers and expansions of existing plants happening, what is the projection for domestic crush when currently planned facilities are on board? If this keeps up, we may not need much of a raw seed export market?

[beaverdam]

Canola out of sync this morning with all the other grains, what gives?