pricing canola gimmick

[dave4441]

Hmmm... dont think it was hindsight Errol as i believe you were suggesting this as stategy last fall but everyone was a bull!!

[Hopperbin]

At the moment here I am left with some bins of Canola. I know all about rolling and rolling untill your screwed. Guys ask for a basis contract that you do not have to roll. Make it for the month you deliver. Is that too simple or is that too simple.

[Hopperbin]

Errol what I would like is a basis contract that I can deliver up until next Dec. is there such a thing??

[Hopperbin]

ADM watson had a deliver now price untilll end nov. but am sure it was a screw job. The basis should not have to be rolled.

[errolanderson]

Hopper . . . basis contracts can be effective, but they have to be managed.
If not managed, they are simply just prograstination contracts.

Basis contracts strut-their-stuff when the futures are in a squeese. Then every dollar the futures roar up, the cash price follows. But if there are no targets and the futures fail,these contracts are simply boat anchors.

Personally, not a fan of growers signing July canola basis contracts last fall. July is a poor demand month to tie into. It offers time, but so what? The price party may long be over by then.

Personal opinion . . . don't roll basis contracts. If you are rolling basis contracts, you badly need a commodity trading account.

Not sure why you would want a new crop basis contract for old crop in this market environment? Your net return would be sharply lower as new crop market are sharply inverted.

Hopper . . . give me a call. I'd like to help you out with some ideas.

Errol

If you really have an urge to stay unpriced into fall, don't preprice your new crop. Or scale in some December corn call options. But this is not risk management (IMO).

[Choice2U]

Clean snow away from bins, start augers or grainvac at -10, pull truck if on slight incline before filling...I don't think so Tim. To do this, I would want to know exactly what I am getting for this canola and be happy with the price given the extra work. Worst case, you do all this and the futures price continues to drop and you did all the work at the worst possible time. If you don't bite and the market drops, well...at least you didn't push snow and you didn't lose any more.

[rook]

these are all good comments - thanks!