Market Predictions for 2007-08

[kamichel]

I can remember last time Canola was this high for new crop the price stayed high and got higher.
IF I remember correctly for the peas last time we had contracts like this they tanked after the crop come off.
Looks to me demand for Canola should be strong as bean acres are down, and Canola has a more healthy profile, ADM is crushing is USA. China crop is questionable. CWB new crop prices don't take into account handling, rail, cleaning increases.
Freight rates will rise, Dollar looks to rise, rail strikes still a problem along with port workers etc could damage agriculture. I will have to make a relationship with my new JRI owned ellevator.

[BennyHin]

Tom:

The weather as you stated is unpredictable, but there are marketing tools that I can use to hedge against adversity, to maximiSe my returns. Oh, yes there are weather derivatives offered on some exchanges, but the liquidity and costs to use these are not feasible in my opinion.

Come on Tom, when should we sell our grain? Also please tell us how all of us can sell 100% of our production Off-the-combine" at reasonable returns, because I hate building bins at $2/bu.

[wd9]

Then buy some Behlen bins at $1 / bushel and save 50% over your apparent estimate. It's easy if you try.

[Fransisco]

You all are missing the point.

Benny has pulled the old bait and switch here. As a die hard CWB supporter he is not actually interested in maximizing returns, getting the most out of the market, or selling at the highs.

The cwb philosophy is buy low, sell lower, blame the feds, and ask for a handout, ala the current malt barley boondoggle.

He is not actually interested in using any of the hedgingpricing tools out there, that is not the cwb way.

Benny no doubt has a 'contingency fund' that he has saved up over the years so as not to have to bother with those pesky futures markets and all of those evil speculators and multinationals. That is the cwb way.

Come on people, Benny is about as much interested in beating the market as Paris Hilton is at reclaiming her virginity.

Why are you letting him wind you up like this?

[chaffmeister]

Maybe this is a topic for another thread but BennyHin brought it up with:

<i>please tell us how all of us can sell 100% of our production Off-the-combine" at reasonable returns, because I hate building bins at $2/bu.</i>

I see an unfortunate problem with some fairly typical farm marketing described in Benny’s idea. Most farmers don’t see the benefit of storing grain when the market is signaling you to do just that.

For example, right now the canola futures market is showing a spread between Nov and May futures of $18.40 per tonne. This means that right now you can sell canola for spring delivery at a premium of about 42 cents/bu over the “off-the-combine” price. And this doesn’t even include any basis appreciation. Often the basis strengthens from harvest time to spring as well. If the basis for “off-the-combine” deliveries is historically weak, this would be a further signal to sell for spring delivery and store it.

I’ve seen as much as a buck-a-bushel to be gained by selling in the fall for spring delivery and storing it. Even so, let’s assume you can get 50 cents – not far off the 42 cents the futures are showing right now. At BennyHin's $2.00/bushel cost, building storage (if you don’t have it already) could give you a 4-year payback on your investment. Using wd9’s numbers of $1.00/bushel means a 2-year payback. In investment terms, that's remarkably good (50% return on investment).

So if you’re looking to forward sell some canola now, consider your delivery period options.

I also checked feed wheat and barley – futures show 27 cents and 34 cents per bu gains for deferred delivery.

PLEASE NOTE – this “strategy” does not say to wait until spring to sell. The “market” is willing to pay you to store but to lock in those “storage premiums” you need to SELL for deferred delivery when the market is showing it – either sell futures first then the cash or just sell cash. Carrying charge markets tend not to earn their carry – which means that the storage premium erodes over time. Waiting to sell is a crap shoot. Selling for delivery when the market is telling you to is smart marketing.

So to BennyHin – I suggest you take a hard look at the benefits of storing grain. There can be substantial gains in it if you spend some time to market properly – responding to market signals.

And Benny, before you make the assumption - no, I'm not a broker.

[TOM4CWB]

Chaffmeister,

Simple observation:

CWB grains seldom earn this significant fall to spring carry... "large" producers can't take advantage of the many CWB delivery quirks...

that allow early delivery to low volume/growers selling product to the CWB.

[Burbert]

Tom4cwb, Excellent point that you just made Tom, after all this is really about the big boys isn't it? The rest of us can go jump in the lake, right? No wait I read somewhere, someone once said the meek shall inherit the earth. You duds are basically doomed, ha, ha, ha, ha, ha, ha.........

[wd9]

Chaff, it is important Benny dumps all his production at harvest so the rest of us can enjoy good storage premiums. Absolutely the canola market is paying to store old crop to sell in new crop year and be paid to store. The last western producer had Behlen specials at around a buck a buchel - some less - and with the CCA tax savings even less again, it is financially a good decision.

So yes, Benny, please oh please sell all your old crop immediately and the second you harvest it, sell and deliver that too. Even better do a storage ticket and price it the last day when the price is at the absolute bottom!

This will be best for storage premiums for me to pay off those bins in a year and a half.

[BennyHin]

Who is Paris Hilton? A farm economist? Leader of the WCWGA?

[BennyHin]

Frisco, you are way off base. I just asked Tom for his hind site marketing up front for this year.

By the way, I see the NDP'rs won in your province again. What will happen with your pig barns now that the NDP have a solid mandate to clean up the environment in your province?


God Bless Tom.