Old crop canola

[tipsy]

And Oh BTW... the canola futures market is irrelevant for my farm until I get a better grasp on how guys are progressing with seeding for the next 2-4 weeks.. good luck all..

[DogPatch]

Putting them in a trailer should be safer, but thats typical of our MB NDP. Can't inconvenience their voters going to the lake and having to slowdown for cows and to wipe poop off their tires.

Can you guess I hate the MB Government?

[Hopperbin]

5 days no rain so go hard if can. http://www.farmzone.com/sevenday_forecast/sk027 But already thinking to carry 22 to shoot the goblin making me hope for a rain to get some time off of this 5:30 am to 1:30 am days. Not sustainable but getting lots done. Actually the futures should be reflecting the later planting as later planting is typically lower yielding. Its great to see the canola price so strong Sask3 maybe still wonders why to grow it. :-)))

[WiltonRanch]

I used to work in the stockyards and I
found the the RT truckers to be
airheads. They are desparate for men so
they tend to hire owner operators that
want to get from point a to b to collect
their dough. I will neither ever hire
them because of their general attitude
to handling livestock and fellow human
beings. Not saying the local old boys
are bad but the guys doing the long runs
seem to be a different bunch.
I put these characters in the same boat
as the guys who long haul grain and
expect to be loaded christmas eve with 2
hours notice.

[jdepape]

errol and others:

Loads of guys calling for fireworks in July futures because of tight supplies. I've been saying for some time now that we are at or near basis levels where, if you're a buyer, it doesn't make sense to bid higher. At these levels you can just as easily and economically stand for futures delivery. If you are an exporter, you can receive futures just about anywhere in the prairies and still be about the same as the where the cash bids are right now.

So upside is limited to futures. BUT - although the open interest in the July is large (1.4 mmt compared to the est'd July 31 carry out of 350,000 tonnes), loads of the OI will get liquidated when "Exchange For Physicals" go through against cash trades. Happened last year too.

Also interesting - the day we get a pop in futures (today) basis levels are dropped by most companies - even the crushers. Not a bullish scenario.

Watch the basis and watch EFP's and open interest. That will tell the tale of old crop canola.

[btjadenlepp]

One of the crushers raised their basis
from $40 to $45/t over on Friday after the
close, bringing the flat price up to
$15.47/bu delivered. What is everyone
seeing today?

[jdepape]

The FARMCo Canola Basis Index (the average country basis) was down pretty hard today to $12.17 over - fourth down day in a row.

That's down 6.19 from last Thursday's season high of $18.56 over.

Felt basis had peaked but didn't think we'd see this kind of drop so soon.

[Hopperbin]

15 dollars in the Humboldt Watson area, what is going on? Its like they have to carry it by hand a 1000 miles barefoot over broken glass or something.

[errolanderson]

The current futures rally is doing the
heavy lifting right now and basis levels
don't have to be as aggressive.

The question in my mind . . . will the
basis recover after the futures sell off?

[jdepape]

The way I calculate it, where basis levels were
last week was at or near "futures delivery
equivalent", at least for exporters. That means
that an exporter can take delivery of futures and
regardless of where in the prairies he gets it, it
won't cost more than what he's paying for cash
canola at his elevator. At this point, it doesn't
make sense - from a trading perspective - to
increase your basis when you can just stand for
delivery at roughly the same value to you.

For crushers, the calculations are a bit different.
For instance, if Bunge in Altona takes delivery of
futures, they may get it in the Peace. Then they
have the cost to ship the canola to Altona.
Richardson in Lethbridge might get it in Morris MB
- or Nicklen Siding in N Sask. Each one is
different and each one will price accordingly.

Errol is right - the futures were taking all the heavy
lifting. That's because there was no reason for
basis to increase much anymore. No trader worth
their salt would ever bid higher for cash than the
equivalent value by taking delivery.

Will basis rebound? Perhaps, but there is a limit.
And I think we were there last week.