Once in a Lifetime Opportunity

[TOM4CWB]

Interesting management decisions being made.

Doing nothing is a decision... if we have the canola seed, fertilizer, equipment, and land to plant our crop this spring... most farmers have these supplies at the homestead ready to go... we are committed to the 2022 crop already.

Canola At over $24/bu[Fall 2022]... even if the price was $50/bu next fall... the put option means this is the worst we can do... no risk... we still get the higher price we get the 2022 crop. Spending the $85/t on the $1085/t put... is the only money at risk.

[blackpowder]

No one seems to be mentioning buying inputs this fall at potentially todays prices? Not quite so funny then.

[tubs]

Interesting management decisions being made.

Doing nothing is a decision... if we have the canola seed, fertilizer, equipment, and land to plant our crop this spring... most farmers have these supplies at the homestead ready to go... we are committed to the 2022 crop already.

Canola At over $24/bu[Fall 2022]... even if the price was $50/bu next fall... the put option means this is the worst we can do... no risk... we still get the higher price we get the 2022 crop. Spending the $85/t on the $1085/t put... is the only money at risk.

If you don't like risk Tom why did you become a farmer?

[TOM4CWB]

If you don't like risk Tom why did you become a farmer?

I was born a farmer... will die a farmer... no one alive today exists without risk. Risk is part of the human condition... going with the knowledge of good and evil [live spelled backwards is evil] Evil=death.

How we manage risk... is an interesting human practice and study.

[Sodbuster]

That once in a lifetime opportunity is getting expensive when you start making margin calls. In hindsight I might of been better off buying a put. In theory as long as I sell my short canola paper at the same time as selling my physical canola I should end up with $1000 a tonne.

Didn’t see Indonesia palm oil happening, gotta wonder what’s next, this year’s been full of surprises so far.

[SASKFARMER]

Really once in a lifetime, we have been basically half canola half wheat since the 70s. Its just a crop.

90 wheat can do it also.

[jazz]

That opportunity of a lifetime has a limited shelf life. Basically 2-3 yrs.

Because in 12 months time, we will either all move to a new price plateau for everything or it all comes tumbling down, probably with crop prices leading the way first if speculative money goes rushing out.

[Templeboy]

The risk comes this fall if you reload inputs and don't sell into the elevated grain market. Likely have to use some DD contracts. ATM puts will be too expensive with that much time value.

The pessimistic view is it won't matter, black Swan events seem to come one after another. Monetary failure, bank defaults, another housing crisis at home, market failure?? What happens to the CBOT if any one of ABCD fail?

I am not a pessimistic person, just some of these weigh on my decisions. Managing risk is my focus.