Pricing Flax/Canola

[danm]

This is my first time in 17 years of farming that I actually sold all of my flax & canola off of the field & then got a position that day on Jan canola.Well this was about sept 15 & I had a few margin calls etc. I was down a couple of bucks & decided to get out since trading was narrow.
So what do I do now, I sold my canola for 5.50 & would like to get back in somewhere.But my trader is uncertain what will happen is just playing the 5-10 waves. Is there a pattern showing? Could someone show me? I would like to get another 1.00 for my canola (target) so how should I do it this winter. Also what about flax should it move more? when should I buy some.I have tried options but always got on the wrong side & never felt they were really any good for the producer (or me).
Dan

[charliep]

My thoughts are for some patience right now. The overall vegoil price situation remains heavy with lots of palm oil being generated in Malaysia/Indonesia and soybean a cheap by product in a soybean market that is getting driven by high meal prices. In the latter case, the high meal prices have corresponded to the time S. American farm managers have been making their seeding decisions (more acres soybeans/favorable seeding and growing conditions to date. My thoughts are that canola will likely hold a trading range over the winter ($270/t top end and $250/t) with a good possibility it will be a market that loses carry (as an example, all futures months lose $6/t premium as Jan. futures become the delivery month and Mar. starts to trade a similar range to what Jan. has to date).

Long and short of it, I am a seller of canola today (even as a speculator) with at least some consideration of selling Nov. 2001 crop at over $295/t (preferably a DDC but selling futures if no one is willing to offer me a decent basis). If I was to want to be a buyer/business speculator (I highlight I'm not), I would be prepared to buy futures on dips below $260. I highlight the risks of lossing carry and a generally bearish world vegoil market.

If I wanted to speculate as an investment/a way to keep me sharp on the markets, I think there are better alternatives including US wheat futures. Any other thoughts about which markets provide the best opportunity for better prices this winter.

Charlie Pearson

[charliep]

I forgot your question on flax. Same general philosophy as canola. Flaxseed generally moves higher this time of the year as grain companies get supplies moved east to fill the last couple of boats out of Thunder Bay before the seaway freezes and then goes to sleep until Mar. Some premium on linoil in Europe these days but I think upside potential on flaxseed is limited from current levels.

From personal experience, WCE flaxseed futures are very thin. Implication is something that will either trade very flat (little movement) or behave irratically. Not a market I would encourage for an inexperienced trader. Even an experienced trader will prefer others.

Anyone else with thoughts.

Charlie P.