Canola Futures

[farmaholic]

Those bins work equaĺly as well for buyers who want to speculate too

[sumdumguy]

Yep Farmaholic, there were many years when it was cheaper to buy a crop than to grow it.

[jdepape]

he means he will pay for the new bins he bought because he kept it for $12 , instead of listening to all the experts saying what a HUGE canola crop it was ,even without rain on half the prairies . and telling him to sell , sell , sell . too bad we can never know how small the canola crop really was . not for us low life's to know . it just gets a little old when you hear the excuses why it goes up in the spring 9 years outta 10 . and somehow they work on us so much through the winter that we buy into it , unf$&King believable , actually. not directing this at you in any way , just too bad someone wouldn't really try to help farmers with the truth . farmaholic you should start a marketing newsletter . you nailed it two years in a row ,lol

Sorry for being thick - I thought he was replying to my post.
I share your frustration with crop size estimates but my experience is that often Stats Can is low. Couple years ago they retroactively added 2 mmt to the mix going back a couple of years! Talk about price destruction!
Not sure what excuses you are hearing but canola is very seasonal - most years we get the highs in Apr-Jun. If someone tries to tell you earlier in the year that its NOT going to rally, they should have a damn good reason. It's not rocket science. Also, canola follows the soybean complex - even if we have a small crop, if there's a huge soybean crop, canola flat price is not going anywhere on its own (the real action would be in basis and spreads, mostly ignored by most guys.)

You want the truth? Truth is that its pretty damn easy to end up in the top levels of the annual price range. Not by trying to pick the top but rather, by building a proper position over time using the tools that grain traders use - futures, basis spreads and options - the WAY they use them.

I'm happy to show anyone how to do it.

[jdepape]

caseih, I will be the first to admit I got lucky. But I am learning afew things as I go. Fundamentals(of supply and demand) should play the biggest part of overall price setting, but then you have to ride the futures and options roller coaster(the speculators playground) that gets nauseating after a while.

Another important feature is the difference between "pushing" your product onto the market or having it "pulled" into it. Learn and know the difference. Plan for cash flow to the best of your ability in the ****ed up system we're expected to operate in.

Don't even expect the same prices at competing terminals in your area, who needs what and when? I like to think every terminal within reasonable driving distance is an option for me to sell to. As much as I would like to deliver as close to home as possible, "economically", sometimes it makes sense to drive further.

Is the wheat price coming back again before harvest 2018? I have no clue, but if you have decent Px you might find a premium. Do I think canola has a wee bit of upside? Yup. $12/bu came earlier than last year. The longer into the marketing year....the stronger the hands that are holding it.....but be careful.....greed has taught me a few lessons already but I am a slow learner.....hold out for a nickel and take 50 cents less.

But why is "x" dollars everyone's magic number instead of a nickel higher than that nice round target number? Put a target in for a nickel under that nice round figure? Why should I? So mine "triggers" before AND BELOW everyone else's? Ya right, nice "buyer's" advice....grrrr


A few different circumstances at play here for us as well.....

Good luck in 2018 everyone, work safe and take care.

A lot here to respond to - would love a full blown discussion but will focus on the idea of using targets. I understand why you might like them, I know why grain buyers LOVE them, but they are toxic to the market.
They may work well for you but keep in mind, you - and everyone else using targets - are giving the buyer a whole shit-load of market information and getting little for it except convenience. Its like you've sold them an out of the money call option but getting ZERO premium for it. I can think of better ways.

[farming101]

A lot here to respond to - would love a full blown discussion but will focus on the idea of using targets. I understand why you might like them, I know why grain buyers LOVE them, but they are toxic to the market.
They may work well for you but keep in mind, you - and everyone else using targets - are giving the buyer a whole shit-load of market information and getting little for it except convenience. Its like you've sold them an out of the money call option but getting ZERO premium for it. I can think of better ways.

Well, so far his target ($12) is outdoing your marketing program for the year. Not being critical. That's what makes a market.

Question: Right now we are working with a 21,300,000 tonne production number for canola in 2017. In your opinion could the whole crop have been marketing using your program and attained the results you have thus far? My thought - I doubt it

[farmaholic]

John, I hate the things for the very reason you stated.

I have only started to use them, " strategically", in the last couple of years. Oh yea, and sparingly! Limiting my "offer" by time and putting them on when the market is in my pricing range.

And I think those contracts act more like a ceiling than a floor!

[jdepape]

Well, so far his target ($12) is outdoing your marketing program for the year. Not being critical. That's what makes a market.

Question: Right now we are working with a 21,300,000 tonne production number for canola in 2017. In your opinion could the whole crop have been marketing using your program and attained the results you have thus far? My thought - I doubt it

Location matters - $12/bu is a lot easier to hit in some regions that others. Especially if you are near a crusher. The chart shows program results with a "generic" basis of 10 under. However, we have some guys that are netting over $12/bu, and we're not done yet. (We only advise on basis / delivery timing - we don't trade it.)

Basis matters.

Our approach is very low risk. Setting a target can work but, truth be told, there is the risk it doesn't. i know of many that don't get hit. In fact, when the buyer knows there's a wall of canola available at a price, they use that as a back stop - targets actually supress the market's move.

You'd be right - our program would not work for 100% of the crop sold by farmers. We don't forward sell (before harvest). That's 25-30% of the market. We don't sell AT harvest or even shortly after. Now that's up to about half the crop. But beyond that, yes, the other half the crop COULD be marketed this way getting what we call "top tier" prices (top levels of the price range over a crop year).

We approach the market like grain traders do - so, ironically, I can say that 100% of the crop IS traded using the techniques we use - it's just that buyers are using them, not the sellers.

For what its worth, a $12 target won't work for the whole crop either.

[farming101]

Location matters - $12/bu is a lot easier to hit in some regions that others. Especially if you are near a crusher. The chart shows program results with a "generic" basis of 10 under. However, we have some guys that are netting over $12/bu, and we're not done yet. (We only advise on basis / delivery timing - we don't trade it.)

Basis matters.

Our approach is very low risk. Setting a target can work but, truth be told, there is the risk it doesn't. i know of many that don't get hit. In fact, when the buyer knows there's a wall of canola available at a price, they use that as a back stop - targets actually supress the market's move.

You'd be right - our program would not work for 100% of the crop sold by farmers. We don't forward sell (before harvest). That's 25-30% of the market. We don't sell AT harvest or even shortly after. Now that's up to about half the crop. But beyond that, yes, the other half the crop COULD be marketed this way getting what we call "top tier" prices (top levels of the price range over a crop year).

We approach the market like grain traders do - so, ironically, I can say that 100% of the crop IS traded using the techniques we use - it's just that buyers are using them, not the sellers.

For what its worth, a $12 target won't work for the whole crop either.

Thank you for the reply. I think your comments help us to see that there is an average price that can be attained in the marketplace for the total crop. That average moves up or down depending on world markets and the domestic harvest results. The key is to get a return that is better than average. If enough learn to use a few tools that can make that happen, first, good for them, and second, it should raise the average.

[Guest]

Got $13.50 for july nexera for the last of it. If anyone has any left, it sure is a nice premium for canola that yields as good as any other !

[farmaholic]

Leaning toward putting some in on Odyssey treated(2017) pea stubble. Found a Company still contracting some for Jun/July/Aug "next" summer.

Nice job caseih!