Canola Volatility

[Incognito]

After peaking yesterday morning at $444.00 in the May, canola closed at $413.70 today - a 69 cent a bushel drop.

Reports on Friday had some AB locations at zero basis for July @ $9.98. Anyone take advantage of it?

[crusher]

I missed the magic $10.00 by a nickel. Was busy selling on the way up, so I've only got a couple of bin bottoms left. Another USDA report tomorrow, should lead to more craziness. Glad to see new crop more stable - just have to find some reasonable basis somewhere.

I've been getting interesting old crop barley bids that may force me to get down to bin bottoms for that commodity too!

[Incognito]

Green machine is 6 under for June @ Clavet

[charliep]

An interesting comment on the relationship between cash and futures. Futures crash, basis level narrow to hold the cash price at a level farmers will deliver at.

Perhaps a signal to book basis (don't know if grain companies will commit) and perhaps (if you are bullish) let the futures side float. DON't (and I repeat DON'T) deliver your canola on an unpriced contract without basis locked in and leave the price side open.

Perhaps also seek some comments on holding cash versus selling getting long futures/owning calls. The risk in the former scares the tar out of me in terms of having to keep wide stops/running with none and the latter are extremely expensive given the volatility in the market.

Others thoughts.

[charliep]

My comments on where to place stops (if at all) and expensive calls refer to holding a futures/options position. The question is whether you deliver/use one of these tools or just hold.

[charliep]

What are peoples thoughts in terms of actions.

Just a note new crop canola futures prices are holding up better than old crops and soybeans.

[charliep]

You know you're going crazy when you start talking to yourself. Somepeople say the real sign you're loosing it is when you start answering your own questions.

What an interesting day in the market. Comparing to fishing, you can move from lots of fish biting to boring to wild again in very short order. Again the issue is too high a weekly consumption given the supplies of US soybeans to carry through to new crop.

When will it stop? Don't have a clue. What I do know is the importance of a plan with price targets and actions. Only a fool will try to forecast this market. Look at long term price charts and ask youself how long prices have held up at these lofty levels in the past.

[ianben]

Hi Charlie
Sure is quiet here. Is everyone busy seeding? A bit early yet isnt it for Canada?

Crops looking good here Winter canola just stating to flower, winter wheat and barley greened up and starting to grow, 1st node any day. Finished seeding spring canola today.

Main worry is fungicide resistance in wheat

Strobulins will no longer contol septoria major yeild saping problem.

These fungicides have given plus 1Tonne/ha and encouraged us to grow suseptible high yeilding varieties and spray routinely.

Weather which favors septoria (spread by rain splash) could see big losses here and across europe I think

[rain]

Lots of commodity brokers can't decide which days they are bearish or bullish. I expected new crop canola to be off do to the snow. A good wet soaker up the highway 2 corridor, north and east of Calgary.

So many people ars so bullish right now and the don't seem to know why.

We shorted the November futures today at $390.00 and looks like we might get stopped out tomorrow.

[charliep]

Another wild day. It would appear (short term) to be a bull market in the last moments of rolling over and dying (keeping in mind CBT soybean futures remain at historically high levels). The market needs another piece of good news to push higher (US mid west weather).

Old crop - no advice (if you are still holding, you are a far gutsier poker player than I am).

New crop - You should have your planned fall sales priced at current levels. This will mean selling at the current ugly new crop basis levels. Part of the issue on the latter is the margin/cash flow implications of a futures position (you have to have a banker who understands futures/their commitment).

What are others thoughts.

[charliep]

Good to hear from you Ianben. I appreciate your keeping us up to date on what is happening in Europe.

I have a project in the Ukraine (if all works well) this June so I will be able provide some on the ground intelligence on how well they are progressing/moving their industry ahead.