Just a note to highlight/get some discussion going around grade discounts for canola.
A couple of things got my thinking going is talking this am.
1) A discussion last couple of days about grade discounts locked into basis contracts. One person I know locked in a zero but the discount for 2CW is $25/t. If you have a basis/deferred delivery contract, blow the dust off it and see what you are commited to.
2) The discount on the futures side is $13/t for uncommercially cleaned 2CW canola. http://www.wce.ca/education/contractspecs/canola_f.asp
3) Export markets want 1CW canola with them only willing to take 2CW in crisis. It may be the year.
4) Domestic crushers are more likely to take lower grades but only at steep discounts (they have extra costs to clean out green color from oil/likely use it as an excuse to contribute to margin). Putting in context of this year, grade patterns/likely discounts will be part of the matrix crusshers use in their decision whether to crush or shut down.
With all this information, I don't know what to tell you on discounts - I have to be patient to let the market decide. It is something you will have to follow.
Others thoughts?
A couple of things got my thinking going is talking this am.
1) A discussion last couple of days about grade discounts locked into basis contracts. One person I know locked in a zero but the discount for 2CW is $25/t. If you have a basis/deferred delivery contract, blow the dust off it and see what you are commited to.
2) The discount on the futures side is $13/t for uncommercially cleaned 2CW canola. http://www.wce.ca/education/contractspecs/canola_f.asp
3) Export markets want 1CW canola with them only willing to take 2CW in crisis. It may be the year.
4) Domestic crushers are more likely to take lower grades but only at steep discounts (they have extra costs to clean out green color from oil/likely use it as an excuse to contribute to margin). Putting in context of this year, grade patterns/likely discounts will be part of the matrix crusshers use in their decision whether to crush or shut down.
With all this information, I don't know what to tell you on discounts - I have to be patient to let the market decide. It is something you will have to follow.
Others thoughts?
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