Canola Marketing

[farming101]

Be watchful, inverse old crop/new crop futures seem to have a way of unwinding.
In years where old crop gains on new crop from here forward usually the Nov contract has gone up too, just not as much.
2014/15 ending stocks are totally up in the air right now, but there hasn't been any guesses under 1M tonnes.
Happy marketing!

[charliep]

Spread held into the close. March contract up $3.70. November down $1.20.

[mcdon]

With respect to the inverted canola spreads,deliverable stocks have a large influence (1 million tonne carryout is used as a proxy/tipping point by trade, should probably be higher) but there are other influences such as contract specifications. This is where traders who know the implications of the specifications are at an advantage to the rest of the trade.

[charliep]

My carryover is closer to 1.5 million but that is still a stocks use of under 10 % or less than 1 months supply on July 31.

I am finding this weeks Grain Statistics interesting.

1.3 millions tonnes of canola in commercial position. Of this, 800,000 tonnes is in primary elevators. Only 83,000 is Vancouver and 80,000 tonnes in transit (in a rail car). Hopefully weather stays good to keep the supply chain moving.

[farming101]

Canola producers have done their work as far as getting canola into position for export. Now we can expect nearby basis to worsen.
The Pacific stocks include Prince Rupert as well. There are 4 ships in port or due soon according to PR vessel report. The one, Maverick Gunner, has been there since December 16.

[farming101]

I should have noted those are just the ships designated to load canola. Those four ships likely need over 150,000 tonnes to fill them.

[mcdon]

Charlie, what criteria do you use to determine the value of a spread ?

[charliep]

Except in times like now, don't follow spreads that much. In a market with carry, I would look at history and the CGC data farming101 highlights. Inverses have me as confused as anyone.