New crop canola price protection

[TechAnalyst]

We certainly are having a hard time communicating.

I am in no way trying to discourage anyone from contracting what they feel comfortable in doing so (new crop sales). And I do think buying a call at the right time is wise to protect against a 2021 repeat on what they do sell.

It is the portion of production that one is not willing or able to forward sell due to production risk that I have suggested be covered by purchasing put options.

I don't know of grain buyers willing to buy puts for producers with no delivery strings attached but good on them if they exist.

As far as the $200k, you know that's not required for the option strategies I've suggested.

In your example of 500t at $18, it would have been a $9,500 outlay (plus commission). That's it, that's all. Then hope they expire worthless so you get a higher than minimum price.

[TOM4CWB]

[QUOTE=TOM4CWB;529338][QUOTE=TechAnalyst; “You really are letting '21 keep you from having an open mind.”

Techa you totally missed the point of my risk management strategy as I have discussed here and in the inflation thread.

My Canola buyer is happy to add any option to any Canola contract we have done with them.

So… as I said earlier:
Sell the deferred Canola and buy a call option?
Just buy a out of the money $700 put against fall 22 canola delivery?

Believe me it is wild to conform to all the regulations and registrations a futures trading account requires now… let alone the bank line of credit for any decent volume 200,000$ minimum is needed…if futures trading is involved…

It is far better to attach an option to a sales contract that already has a decent basis and delivery period that a farmer already needs to be putting in place for the fall of 2022 for cash flow and loan payments.

Cheers and blessings![/QUOTE]

I am trying to get AFSC 2022 grain insurance prices out of them so know what values will be embedded in our crop insurance and costs also would be helpful!
The answer I got was April which I know is wrong…

So going after the academic vegetation is futile… go up the chain!!!!

Cheers

[Oliver88]

[QUOTE=TOM4CWB;529353]

I am trying to get AFSC 2022 grain insurance prices out of them so know what values will be embedded in our crop insurance and costs also would be helpful!
The answer I got was April which I know is wrong…

So going after the academic vegetation is futile… go up the chain!!!!

Cheers

Manitoba released values in January. Saskatchewan Ag says they likely will mid February.

[TOM4CWB]

[QUOTE=jwab;

I’m working with Bunge today they are actively putting options together for contracted fall delivery Canola.

I can buy any Nov22 calls or puts against contracted sales done right now .

With the shortage of Canola in western Canada it is really hard to imagine that our Canola fall prices will disintegrate before spring seeding at least… exports are cut off… stocks must be rebuilt…. Mid summer is likely to be the earliest a large scale downdraft will occur in the Canola market… especially now with the South American Soy production problems.

Options against sales should be held to expiration, since Bunge tells me they will write options to cover spring of 2023 canola sales… hands down doing this risk management through contacted 2022-23 canola sales is very attractive and cost effective.

Relationships with Canola buyers of trust and integrity will be the prime factor in doing risk management of grain sales in 2022-23.

Cheers! We are blessed to be in Canada!!!

[Sodbuster]

It’s much easier to get out of a contract using paper than it will be trying to get out of a contract with a grain company. You still might have a loss but you can get out of it sooner if you feel you can’t produce the tonnes you have contracted. I don’t sign contracts with grain buyers until I have it in the bin, but will do options or hold a position with a commodity broker before I harvest the crop.

[KochiaKing]

Off topic but has anyone ever rolled canola? Have heard different theories of it making it tougher to break through the soil but also could trap moisture in.

[TOM4CWB]

Off topic but has anyone ever rolled canola? Have heard different theories of it making it tougher to break through the soil but also could trap moisture in.

We always roll our Canola, wheat. peas.
With 12" spacing seeder [1870JD] we use a 3/4" seed boot that is on one side down 1" in the seeding trench which results in rolling that flattens the top highest ground between the 12" seed rows... which normally is 7" wide .

Depending on the seeding speed... faster [5mph+] piles more dirt on the 7" high ground between the 12" spaced seed rows... with the ground level at the bottom of the seed row normally at least 1" down after roller packing... flattened a good 1" by the roller packer.

To reduce dirt movement out of the seed row-[ thrown up on to the 7" high ground between seed rows]... I normally seed at 3.7-4mph.. this gives better more consistent planting depth accuracy... roller packing does add 3/4" more dirt on top the canola seeds... with normally seed at least 1" down [over on one side on a ledge] but firmed in moist dirt for good seed to soil contact.

For wheat and peas [1.5"] we go/seed at least an inch deeper than seeding Canola. When dry try to roll right behind the seeder to save moisture by firming dirt on top of the seed. Pick big rocks with roller tractor... smaller [under 6"] disappear /pressed flat by roller so never any knife sections damaged in harvest.

We have a Degelman roller and don't add ballast/water -to reduce soil pulverization /erosion. IVT tranny so 10mph is comfortable.

Hope this helps!

[Oliver88]

If they expire worthless I assume they are tax deductible, can someone verify that for me please.

Good question. It would be good to see the opinion from someone who is an accountant or broker.

[TechAnalyst]

They definitely are.

[TechAnalyst]

Similarly, if prices break and they are sold for a profit the net profit is taxable income.