Canola price discovery

[Lifer]

Why is a valuable product, and I emphasize product, like Canola Oil have its price discovered with veg oils, which are just commodities?

[melvill]

lifer, in my opinion, canola is forced into valuing itself along with other lower quality oils because of the high substitutability. Soyoil, cottonseed oil, and even palm oil can be substituted for canola oil in some or many markets. We need to remember two things:

1)Not every consumer is worried about eating healthy so they can maximize their life expectancy. Some consumers in second- and third-world countries are mostly interested in getting enough low-cost calories to make certain they survive for the next week, the next month or the next six months. Some disadvantaged consumers in first-world countries face the same issue.

2)Canola (and canola oil production) has reached such a high level that we must compete in the world market in order to find a home for everything that we produce. Cut back our canola production to just meet our domestic needs and we might see a higher price (the way we have done with soft white wheat).

[onearm]

Lifer:
are you sure you didn't want to emphasize "valuable"

[Lifer]

In my opinion if we think more along the lines of producing a product rather then a commodity we increase our opportunity for value. (get closer to the consumer).

Aren't we losing opportunity because of not enough production to fit some of the higher need markets?

[charliep]

What are peoples experiences on the profit side when you are doing your budgets comparing the newer hybrid canolas and the specialty oil ones? I hear mixed reviews.

[onearm]

i assume you equate higher need to higher value

[onearm]

oh, and back to your first question: they are substitutes.

[Lifer]

I do equate higher need to higher value.

Sure canola can substitute Soy but Soy can't always sustitute canola.

[onearm]

so higher need equals higher value, but does need = want?

[Lifer]

Need doesn't equal want.

Consumers spend even more on their wants.

If there is no need or want for something it becomes more difficult to sell.

Just words. If we are in the mine set of making a commodity are we not one step farther removed from needs or wants?

If we have a mind set of making products are we not more open to the opportunities that may come?

[Lifer]

Charlie, assuming the specialty oil contract will yield at 80% of the Invigor.

The specialty oil will return $18 more per acre for our farm.

[melvill]

Is it valid to assume that the specialty canolas will yield about 80% of the non-specialty types?

I'd like to hear opinions from other producers along with roughly where your farm is located.

[onearm]

the 20 yield drag would hold in manitoba