Nov Canola and bottoms of bins

[JD4ME]

Charlie and Lee

So how are the thoughts this week on pricing of new crop Nov as well as cleaning out the last jags of old crop.
If overnight is correct we should see (with a zero basis) July break through 300 today and Nov should get to near 310. So 6.80 and 7.00 range for old and new crops.
Not the levels of last year at this time but still likely a starting point for 5 or so bushels an acre wouldn't you think? Looking like the crops are in decent shape so we may be near a repeat last years yield levels.

[crusher]

Good strategy to start selling if you are making money at those levels. Don't lose sight of the fact we are in a global marketplace and what happens south of the border has more of an impact on price than what's going on in your backyard.

[JD4ME]

If you want to be cranky do the conversion today on beans to canola,

July beans at 7 dollars US and July canola at 6.80 canadian!!!!

[Incognito]

Wanna get crankier...a grain company is is frikkin whining that their margins will shrink from 22 bucks to 20 bucks per tonne handled this year.

And the farmer's union is afraid of the multi-nationals coming to Canada? Good grief. Auntie Nettie et al could be so lucky.

Is the industry so mismanaged they cannot make money even with those margins?

Is it over-regulation?
Over-built?
Lack of competition?
Price-fixing?

What do they do different in the U.S.?

Post a 60 cents under for DNS and see how much wheat you would buy on the Plains.

At a tonne an acre, how many farms worked on 22 bucks an acre margins?

And why does the board, the farmer's friend on the radio and the industry's friend in the boardroom, allow it?

Will farmers ever wake up or is it better to work within this BS system and survive rather than change an industry that doesnt want to change?

Losta questions - who has the answers?

[charliep]

Depending on financial situation, cash flow needs and marketing plan, I would be selling some at these levels (old and new crop).

The rally in beans is based on potential weather concerns (conditions pretty good in most regions of the US so far) and the unknown of Asian rust. As with 2004, August is the critical month. In terms of market outlook, you pays your dime and takes your chances.

Canola carryovers this summer are large. My July 31, 2005 number is 1.3 MMT but lots of analysts are over 1.5 MMT. To put things in perspective, under 500,000 tonnes is small, 750,000 tonnes is normal and over 1 MMT is big. European ****seed/canola crop will start to be harvested in July. Aussie acres are down with dryness.

[melvill]

My worry is that canola growers will become too optimistic watching US soybean growing conditions and old-crop bean carryover. Charlie's comments about the large Canadian canola carryover are important to remember. The large canola carryover are a result of both decreasing crush and lower than expected exports.

[Incognito]

and the bureaucrats take a pass....

[melvill]

Okay, incognito, I'll bite. Please explain what your post means.

[JD4ME]

remember this post is about canola pricing if we want to talk about margins in other areas of the industries there's lots of room for new posts. As I've said to Charlie the tendency to wander off topic is likely the biggest downfall in here.
Thanks

[melvill]

JD4me, okay, I'll give you my opinion. I would be pricing a big chunk of my old-crop canola now, especially at the very strong (good) basis that is available at some locations on the Prairies. Now, I don't know if July futures are going to go higher or lower. I just know that if the dry parts of the US midwest get rain, canola futures prices are going to go down, especially given the ever growing old-crop carryout.

For new-crop, I put in another post that I'd suggest that producers get to 10% priced (sell futures or a DDC with a decent basis) at Nov futures over $300. I'd add to that 10% so that I'd end up at 25% priced at Nov =$310/t. It's important to remember that the part of the soybean belt that's dry is only about 15% of the production and that area isn't that short of rain. As Charlie said, the most important yield determining time for soybeans is August.

[charliep]

Incognito

Perhaps I will turn the question around and ask why more export business was not been done this past winter. Canola has been competitively priced with soybeans all winter and yet has not been able to generate much excitement.

Another observation (perhaps wrong) is the grain companies seem less and less willing to short the market - aggressively put on canola sales without having assured supplies in their system. The end result is a sit back and wait approach up and down the whole marketing system.

You are likely right the system needs a shake up. I don't have the magic bullet.

[Incognito]

Maybe the question should be:

Who would want to handle canola as a company, with the inherent risk that farmers won't deliver, countries won't pay and railcars won't arrive on time, vessel demurrage is at 35K a day, for $10.00 or less a tonne when the margins for CWB are twice that?

The bureaucrat thing wasnt a shot at you two, it just seems as though no one wants to confront the issues anymore.

Sorry bout the "on another tangent in this thread" ... maybe i'm getting old or ADHD is catching up..

[JD4ME]

No Probs Incognito, Lee and charlie answered my question often I find I am just looking for backup on something I am fairly sure about, However I am worried that we are losing market share due to uneven tariffs on Soy vs canola.
I believe we are slowly being squeezed out of a number of markets,
I wasn't kidding when I said we need short season beans I'm afraid.
Is there any hints of work being done on this at LAcombe?
I've wondered if anyone has tried them in the Peace as they actually get more light hours in the north in the summer and Beans are light determinant.

[melvill]

JD4me, I'm housed at CDC South in amongst all the production research scientists (it's a pain). I know some work has been done here on soybeans but the scientist isn't in today. I'll pick his brains when he gets back and let you know.

[ward.toma]

RE: soybeans in Alberta

There has been some work done by CDC south at Brooks. Some work has also been done by the B.C. Grains Industry Development Council in Rolla B.C. with soybeans. Two years ago they harvested seed, last year not.

Ward Toma
ACPC