Soybeans are up 9 cents in overnight trade

[ALICIA]

Good volume too. Over 2000 November contracts have traded at 10:10 p.m.

January and March up 10 cents.

Canola will be interesting in the a.m. but the CAD dollar is up strong in Europe tonight and may limit gains.

[charliep]

Sometimes interesting to come back to a posting like this a couple of days after the fact. A couple of days of rallying fallowed by a quieter day today. Are there actions coming out of this? Are basis levels still ugly in your area? Rain reported some better ones around Calgary? What about for further out months?

[rain]

There was some spot at 6 under the Novemeber delivered. The best I have seen since that is 13 under the march for march this week. Calgary. 25-32 under spot-Nov yesterday.

[AdamSmith]

$51 under Nov. Tri-Lake Agri Killarney MB

$42-48 under are common in SW MB

Going out to March $33 to $37 under

Here in SW MB were stuck between a rock and the deep blue sea.

[timm]

crushihg plant harrowby 39 spot,25 march, probably best basis for se sask.,at least as far as i know.

[charliep]

Soybean prices are on the move higher again today (at least mid session). Canola also higher but lagging. My theory is that the market needs the signal of some Chinese business before canola plays catchup with beans. The signal may come with tighter basis/premiums in the country before higher futures.

Are basis levels in the country starting to narrow?

[rain]

Calgary region basis levels are vey wide. 22-28 under for spot.

[rain]

28 under spot at Lloyd
28 under some AU elevators

The green crusher in SK pushed for some 500 MT lots to 15 under in the yard last week but are generally quoting 30 under.

Overall, in SK figure 28-52 under. Scary. When we designed the canola contract and it is now 8 years old (it began September 28, 1995) we envisioned max basis levels with the new par region hitting $20.00 and positive basis levels with increased demand would be the norm. Gong!! Boy were we wrong.

We now have the crushers taking 58% of last year's crop and are on eve of a 6.1 to 6.5 MMT crop this year and the Chinese are nowhere in sight.

We better hope that beans go to the moon and canola continues to lag because with no export demand, carryover like basis levels, will be scary.

[rain]

Larry Week 7 406,900 tonnes canola export. Last year week 7 153,200 how much export do we need.

[rain]

We have 900,000 MT carryover from last year that is incredulous in itself when we hit $10.00 a bushel.

We will grow a conservative 6.3 MMT crop this year putting a 7.2 MMT potential supply in the pipeline.

We will crush 2.5 to 3 MMT of seed if these margins are maintained and if we are to get down to 750,000 MT of carry for 2003/04 - we need to export from 3.45 to 3.95 MMT.

While I appreciate that we are well ahead of last year's pace exporting ( 253,000 MT), if we maintain this pace set through the first 7 weeks, we will only export 3.02 MMT and carryover will be well over 1 MMT for 2003/04.

Asia usually has huge programs Sept through Dec. China has been absent so far, and if we are to get under 1 MMT of carry, we better have them pencilled in for 300-500,000 MT.

Are we doing better exporting this year? We have exported 6.26% of this year's projected crop. Last year we were 4.27% of a 3.6 MMT crop. So while your comparison looks good on a year-to-year ratio, it pales when you consider how big our crop is this year versus last.

We need some demand to enter this equation real quick.

Another factor that has to be considered is that we were trading 63 cent dollars at this time last year (1.5873) and this year we are trading 74 cent dollars (1.3514). Like it or not canola is sold in US dollars.

Today's close in the Nov. equates to a USD$267.72 using today's exchange rate. Last year's Sept. 30th close on the Nov was CAD$425.00 and with the exchange was .......drum roll please.....USD$267.75..3 cents difference in the last year.

So the export asking price has remained static - but the rise in currency has meant a $1.43 a bushel drop in price. And the export asking price was based on a 3.6 MMT crop - not a 6.3 MMT crop.

So while I agree that basis levels are wide, the biggest culprit has been the rise in the CAD dollar. With currency levels at or near last year, you would be trading $9.00 canola this year.

I reiterate my initial comments: " We better hope that beans go to the moon and canola continues to lag because with no export demand, carryover like basis levels, will be scary."

We peaked last year in the November contract on November 4th at CAD$449.50 and in last year's US dollars was $283.18.

So what's your upside to last year's highs - another USD$15.46 or CAD$20.90 MT. So we are trading close to last year's highs in USD and without some Chinese demand, a wreck in South America or an absolute disaster in the US (sub 2.4 billion) bean crop, we will NOT come anywhere close to last year's highs because we are close to there already in USD.

Farmers need to utilize a hedging mechanism for CAD/USD currency risk. Talk to your banks/futures brokers and develop a plan. We have lost 10% of the value of grain since you began seeding to currency fluctuations.

There is enough ammo up there for everyone to pick holes in so fire away...and it should be grounds for discussion on some points.

Regards,

[rain]

Dollar aside why is it guys like you alway say look at the beans look at the beans. Soyoil is the driving factor not soybeans. The US could be setting up to be a very big importer of vegoil this year. Soybeans to my knowledge are grown for the meal and oil is a byproduct. Canola is grown for the the oil and the meal is a byproduct. Maybe you where with the grain company to long.

[rain]

Week seven Canadian Canola export 406.9 Forecast is 464.38. Canadian Canola
Domestic Use 378.3, forecast 385.0.

Exports are off 14%, Domestic use is off 2%. You are right we are behind the pace needed to drop stocks but not so far that we can not make up the difference.

% can be deceiveing especially early in the season.

Don't Cha Think?

[rain]

A) I can tell you that i was with a grain company long enough to know that grain companies don't care if the price of canola is $5.00 or if the price is $10.00. They work on MARGINS.

B)Look at the beans - look at the beans. Brazil is on target to grow 60 MMT of soybeans - enough beans to fill 1000 concrete elevators the size of NWT in Unity or Agpro in Brandon or enough railcars that it would a train 14,973 MILES long.

This year even if the US has an absolute wreck in their bean crop, they will still grow 68 MMT.

Thats what canola OIL is competing with.

This year Brazil and Argentina may surpass last year's US bean production by 10 MMT.

This isn't 1971, 1976, 1983 or even 2002. The dynamics of the vegetable oil industry have changed. Do you think ADM is closing soybean crush plants in the US and moving to South America and China because margins are better in the US?

Guys like me say look at the beans because it is reality. An extra 10 MMT of soybeans means an additional 4 MMT of soyoil. Last time I checked, no one was out looking at the soyoil in the field to see if it was flowering

[rain]

Yes u r right it is too early to compare % after 7 weeks

[timm]

larry, look at the oil world web site and you will see argentina & brazil are getting dry.if you spend a little time on a combine you should know what that does.