canola marketing

[timm]

Profarmer Canada Greg Kostel suggesting 75% sold ....any comments?

[charliep]

Actually Greg is not Pro Farmer Canada - Mike Jubinville is the author. Greg Kostal has his own consulting company. They do work together.

Knowing Greg, I suspect the 75 % sales have been put on over a period of time. Everyone has opportunity to put on sales in the $450 to $470/tonne futures range (Nov. contract) through the spring into June with highs closer to $490. During summer, new crop canola futures have held in the $410 to $430 range (again futures). Today $30. Has been and continues to be production/grade risk.

[charliep]

Today $390 ish/tonne November.

[cityguy]

so if someone is 25% sold right now (becuase they sold 10bu's of what was looking like a 20 bu crop) and the crop is coming off at 40 bu's, are people saying that another 20 bushels needs to be sold at $390?

[charliep]

Should let others answer but my thoughts are not necessarily.
Market attitude, what other crops are being grown/have been
sold, cash flow needs, condition of canola in storage, etc will
all impact this decision. Everyones market plan will be
different.

If I needed cash flow or worried about condition of
canola/ability, I would be a trigger puller for a higher
percentage at $390 ish futures. Something over $8.50/bu. If
cashflow is covered and canola is storeable, I would try to
push a large percent of pricing into the winter. Will be
curious what others are thinking.

[Hopperbin]

Charlie I respect your comments but must think about something, how many farmers out there were willing even if Costel said to sell when our crops were freezing upon emerging. Got some serious dryness then got some much needed moisture to make an above average crop for say my area. When the futures were 450 or higher we did not know if we even had a crop at all, so saying to be sold 75 percent now would be like saying sell at todays prices, not 450. Plus gotta through this in there I think you did mention how high crush demand is and export market should be there. Does Costel have a point on that? Then on the flip side canola is very high priced compared to other commodities in my opinion but the price crash on other commodities did not happen till just a few weeks ago.

[bgmb]

I was way to scared to sell any more than 10 bus to the acre up until we started swathing. I believe that would have been foolish because if we would have had a frost I could have been left with no canola to fill the contracts and futures probably would have risen. Bad scenario......

Kostal can recommend whatever he wants but its the farmer that has to live with the consequences when something doesn't go as planned. Not being an a$$hole either he will tell you that.

I guess we all should have sold 18 months ago 2 years out.

[charliep]

Don't get Greg's information so I don't know what he said.
Also realize comes any marketing decision has to include
all the realities of farming including production risk.
Percentages are for guidance and provide a measure of
how well an analyst is calling the market with their goal not
to call the highs but rather have your average price in the
top third of the market. They also provide a way to price
the crop on a percentage basis and can be adjusted to
reflect the comfort level around yield/grade prospects.

Also the market plan can reflect experience and willingness
to spend time. I know someone who sold 2 years worth of
wheat production this summer using futures. A seasoned
veteran of using futures markets and a back up plan of
using stops/other strategies.

So depends on who you are and your individual market
plan based on your farm realities.

[TOM4CWB]

Dear Charlie,

If black oil heads down... grains will follow... and from these levels... it will not be pretty.

High costs... low revenue... ouch!

[parsley]

I'm being redundant, I know, I know.

In the purebred cattle business, a guy would be offerred a good price on the farm for a yearling bull.

The more he looked at his bull, the more valuable it got.

He'd refuse the good price.

Another buyer would come to his farm and offer another dandy price.

Before long, the bull had a fancy name and the Mrs.had a plate set for him at the kitchen table.

The farmer would then take his yearling bull to a premier sale, but the bull, in comparison to others, looking a less than average, got a bid merely a shade over canner price.

The conclusion was the auctioneer was no good. Or somebody was out to get him. Or, "It's not fair!".

And several years down the road, the farmer would repeat the exercise.

The moral of the story: When prices are high, and you have a willing buyer, sell, so mamma's purse can fill up. Pars

[mbratrud]

Just to Clarify, I work closely with Greg and can tell you only 25% was done earlier another 50 in the last 3 weeks when a large percentage of his clients had Canola coming off. This Market went from Slightly bullish to bearish with the realization just how big this north american oilseed crop is going to be. Was is the right thing to do only time will tell.

[charliep]

Perhaps the most amazing thing to me this year is how tough a crop
canola is. Crops that were close to being written off this
spring/reseeded and a 40 bu/acre crop. Not everyone that lucky in
Alberta but still okay yields given the weather (not as bad as 2002 in
most areas).

Everyone should be watching Statcan Friday realizing an early Sept.
survey (little harvest done).