New Crop Canola - May 08

[Fransisco]

Oop's missed that one too. Right now it's off the combine price's that I'm looking for.

[thegrainguy]

We do carry min/max contracts.

Chaff

The futures prices were right but basis are way off.

Spot - 365.20 May 07 - basis 7.00 over
Nov -07 - 382.70 - 18.00 under
May 08 - 406.60 - 8.97 under

[thegrainguy]

Just had a GPO hit for $6.00 yellows off the combine.

[chaffmeister]

I note there’s about $24 in futures carry from the Nov to the May – good incentive to store. Take grainguy’s fall basis of $18 under versus the May basis of about $9 under and the cash carry is $33 (from Oct to May). Figure out what it costs you to store and the rest is gravy. This market is telling you not to deliver canola off the combine, but to store it. (Sell it for delivery in a deferred position.)

Grainguy – you also say your April price is 8.95 – so you’re paying a nickel more for one more month of storage. Going from Oct to April, the cash carry is about $30/tonne or about $5.00 per month (about $0.113/bu/month). Going from April to May delivery pays only a nickel more.

The market is clearly paying you to store. Looking at the spreads, you may be better off selling the April delivery (8.95) than the May (9.00) – depends on your cost of storage, appetite for storage risk, and whether you have a preference, due to other issues that can impact deliveries (such as spring work).

One more thing to consider is how this basis of 9 under the May or 15 under the July compares to typical spring basis levels in that area. I can’t address that. But if current spot basis levels of 7 over is any indication, this would lead to a suggestion that you should lock in the futures (May or July) and negotiate a spot basis next spring. You could be adding another $15-16 per tonne in your jeans.

Any way you look at it, if you’re looking at selling new crop, sell the deferreds rather than fall off the combine.

Would still like to know breakeven – Melvill, any ideas?

[sawfly]

dec, 06 i did my break even on canola . it was 160$/acre up from 145 2 years eariler.

if i had not bought N it would be probably 10-15$ higher now.

our problem is we generaly can't count on yeild to be any more than 25-30.
with poor years in the 18- 20 range and good in 35-40

[cottonpicken]

9 bucks is a lot better than the 7.70 chaff and the boys were pulling the trigger at in november.

[chaffmeister]

CP - you have me confused with someone else. I have never given market execution guidance on Agriville (or anywhere else for that matter). I've only helped read the signals.

Like here on this thread - I say <b>IF</b> you are looking at selling new crop, here's what to look at.

[charliep]

cottonpicken

Would again highlight carry in the market. $9/bu in May 2008 is a good price and a good investment if you can afford it. For others, the reality is fall sales are necessity. Any recommendations I would make would be tailored to an individuals business needs. The objective is to manage price risk/position to take advantage of market opportunities.