The canola council isn't calling for 10 mil. t over night. Besides we probably couldn't increase production that much in a year or two. I think they're suggesting that, with proper market development, (especially including varieties that produce high stability oils) as the members of affluent societies of the world recognize the importance of moving away from hydrogenated oils, there's room for more canola production.
In addition, we (canola growers) had wonderful opportunities to forward price a portion of the 2004 production at prices considerably above current cash prices. I'm continuing to get calls from producers who are almost in panic mode because they've got none of the 2004 crop priced. I really wish more producers would use hedging (with futures) instead of forward pricing through the trade to manage price risk. Using futures doesn't require delivery if production is low quality or reduced.
By example, had a call from a producer the other day who forward priced 1/3 of his production at well over $8/bu using futures and an estimated basis of $15 under. He added some more as the summer progressed. Even with 30% unpriced, his average price for 2004 production will be well over $7.00. His next step is to sell the last of his cash at today's very strong basis levels and buy paper canola. He wanted to pick my brains about timing that. Of course, I can't give him an exact answer but he's thinking hard.
Pencil farming pays! (End of sermon.)
In addition, we (canola growers) had wonderful opportunities to forward price a portion of the 2004 production at prices considerably above current cash prices. I'm continuing to get calls from producers who are almost in panic mode because they've got none of the 2004 crop priced. I really wish more producers would use hedging (with futures) instead of forward pricing through the trade to manage price risk. Using futures doesn't require delivery if production is low quality or reduced.
By example, had a call from a producer the other day who forward priced 1/3 of his production at well over $8/bu using futures and an estimated basis of $15 under. He added some more as the summer progressed. Even with 30% unpriced, his average price for 2004 production will be well over $7.00. His next step is to sell the last of his cash at today's very strong basis levels and buy paper canola. He wanted to pick my brains about timing that. Of course, I can't give him an exact answer but he's thinking hard.
Pencil farming pays! (End of sermon.)
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