From the unexpected file, should a person be buying Canola Call Options here?

[blackpowder]

I hate basis contracts myself. Lost potential when a "special" offered.
I use them mostly because I'm short storage. Guarantees off combine delivery without as much non delivery risk.
Reserves space until you can fill.
Basis changes naturally and can be an indicator until they "gotta fill a train" lol.
Grain is food and as such will always be 90% politics.
Honestly, in the grand scheme of things, having a trading account won't be a mortgage lifter, but being involved encourages you to stay educated.

[farmaholic]

Honestly, in the grand scheme of things, having a trading account won't be a mortgage lifter, but being involved encourages you to stay educated.

Good to know I probably never missed much.

[errolanderson]

I hate basis contracts myself. Lost potential when a "special" offered.
I use them mostly because I'm short storage. Guarantees off combine delivery without as much non delivery risk.
Reserves space until you can fill.
Basis changes naturally and can be an indicator until they "gotta fill a train" lol.
Grain is food and as such will always be 90% politics.
Honestly, in the grand scheme of things, having a trading account won't be a mortgage lifter, but being involved encourages you to stay educated.

Rolling basis contracts a huge cost to growers as grower pays the cost-of-carry between the futures. Rather than roll a basis contract which is nicknamed the ‘procrastination contract’ and if you are bullish, cash the cheque from the grain co and replace with a call option. Paying basis rolls is a heavy cost to the grower unless there is a sustained bullish market.

If you purchase a call and the market dives further, you are on the hook for just the premium of the call, no more, not the cost of the whole bin unpriced. Plus, grain storage can be more a liability than an asset. Move the grain, use your trading acct to manage your price management.

[farmaholic]

Errol, "Like" and "Dislike" your last comments.

Like the statement about rolling the basis and paying the cost of carry AND probably a roll fee as well. And how just buying the call can reduce risk/cost.

Really dislike the comment of "move the grain".....if everyone just did that there would be no need for grain to rally. Image if everyone just dumped their grain and used trading accounts. First affect would probably be a price collapse, then once all the grain was in commercial's ownership(although alot of that may still be in the farmer's bins) what need would there be to increase prices to "open bin doors"?

There is something to be said about ownership.

Attended a GrainCo meeting last winter, seems all "their" marketing schemes and scams offered to Producers were designed to guarantee them a supply coming up their driveway but transfer, or leave, the pricing risk with the Producer.
I'm to cynical for those meetings!

[bucket]

Anyone want to hazard a guess on the 27 billion dollar question and it's effect on markets.?

Is that what they consider a black Swan event.....

Sure looks like it is affecting our markets. ...or will be...

Price protect your crop but Richardson isn't big enough not to declare a "force majeur" if this chinathing isn't cleared up....

It was only when the brass at Richardson made the call that it got any traction....

But farmers will still be the ones with the most to lose. ...

[TechAnalyst]

Just a quick update for those interested.

Nov canola closed today at $473/t so the $470 calls are in the money already. The calls closed today at $16.20/t, up from the $8.20/t mentioned in the original post. For those uncertain, the $16.20 is made up from the combination of the $3/t you would be profitable if you exercised them and were long from $470 plus $13.20/t time value that traders are willing to spend for the right to be long at $470 until the Oct 25th expiry.

Given the poor start to the year and wild weather markets we are beginning to see, I still believe this would have been a good risk management strategy for anyone who had priced fall delivery contracts.

It still will be on setbacks.