Marketing Idea.

[dfarms11]

With all the talk of frost in the next month, I think we all would agree that if we would have a devistating frost Canola would bounce? Am I right on this??

So I would be getting long with some Calls, mabye Novs, they will be pretty cheap, not alot of time, but if it freezes your crop may be screwed, but you could gain some on those options, to make up your crop.

Just a thought. CP, and others what you thinking??

[crusher]

Calls too expensive, I was a buyer of Nov last week.

[jensend]

have to assume some frost risk already priced in which begs the question: where will prices be if we don't get frost for another month or better?

[GOODRUM]

If I remember right in 2004 canola went from $9 to $4 or $5 after the aug frost ,still havent figured that one out

[SASKFARMER3]

jensend its a poor crop that is getting worse each day with wierd weather. Its not gaining production from the number its decreasing. Take a drive man.

[SASKFARMER3]

Have to agree with Jensend, and Goodrum.

Seasonally we normally wouldn't 'bouncing' right now. I'm a little taken of guard right now by alot of markets. Actually the market could care less if we grow a crop or not, but if you stay close with some Calls, or own the futures, you still should make some good money days follwing a frost. The market always reacts intially, then weights for results.

I would be then selling out of those calls, and be keeping my money to load up for 2010!!!

[mbratrud]

Buying a put is the safest way to go right now, and they are more reasonable.
Protect yourself from the downside but dont have the risk of being priced, for both agronomic reasons and price risk if there is a frost.

[Choice2U]

I agree. So far, I've got a $9.70/Mt cost on a $430 Nov call covering product I locked in for Sept delivery (20% of est prod), an $18/Mt cost on a $430 Nov put (20% of est prod), and a Nov basis contract for $1.98 under (20% of est prod). I guess one could call this a shotgun approach. Stuff locked in has downside protection with upside potential. Some is protected on the downside only and some has a good basis just in case the market moves up but the basis increases because the industry can't move it that fast. Don't get stuck on my numbers but rather the concept of using calls, puts and basis contracts. I suggest to buy calls when the market is trending down and puts when the market is trending up to avoid paying a premium for the option. "Pull the pin" when you are happy with locking in a profit but still comfortable with losing the option cost. Just remember that making money on calls and puts requires great volatility in the market. The mistake I made last year was selling a put too soon as I thought canola was close to the bottom in late September. I sold a $1,500 option for $6,500 (sounds nice) but the remaining 80% of canola in the bin continued to tank. Had I kept that put to cover the downside on my remaining inventory rather than take the profit and run, I would have protected a larger part of my inventory. I'm sure I'll have a bonehead story to tell after this marketing year as well since you gotta laugh at yourself when learning.

[cottonpicken]

Canola will bounce with or without a frost,i like the idea snappy,although i cant do it because i am cronically broke buying other things.

Fertilizer looks like the buy of a lifetime to me-tax man likes it,looks like an easy double and you need it anyway.