Thoughts on HRS Wheat Canada

[mbdog]

The crop is in...the trade has done a good job of talking down wheat futures till now...Cash action/basis would suggest futures out of sync...further suggesting deffereds basis are worth watching on the 15/16 crop. Quality is an issue and likely plays into/corrects minny/Chicago or Kansas spreads somewhat, with cash specials/spreads doing heavy lifting of futures...for now.
Enough positive long term fundamentals developing to make wheat a market worth watching.
We live in a world where the "other" side is at risk which is a dimension the trade/market is currently exploring IMO.

[mbdog]

k...i'll respond to myself since we're under the radar now.
Why mbdog... do you post such things?
"because I was sick of the repetitive av bitching by the same people who simply bitch, and who avoid discussing "market based solutions". Thought I would post an alternative solution based thread".
Dunno about AV...if you want an interesting thread to read, go to agtalk, scroll down to Germany also continues...
Might be bullshit, maybe gospel, but its sure as shit better then listening/reading to the constant bitching on AV.

[Oliver88]

What are you thinking for ways to obtain value for high quality HRS wheat?

Basis contract?
Call option for July 2015?
CWB winter pool contract?
Futures contract?

[mbdog]

Oliver...thx for helping out a thread that doesn't deserve to be buried. You ask the right questions....and I'm not suggesting I have the answers...but I'm going to grow wheat again...and have wheat to sell...
I looked into owning out of the money july minny calls in 6.25-6.50 range...pretty thin but affordable replacement strategy for an anticipated sale from short covering/demand led story in the next quarter????...given upside potential vs downside risk from here. The big wheat story getting a little long in the tooth.
If malt, durum, and basis any indication, quality ie minny spread...if contract specs mean anything...is out of whack. Downside futures risk is greater in the cash..not the deferreds...but that's just my opinion. Owning deferred futures jult/dec as replacement is something I'm considering, but not something I'd step into today. Will continue to watch with interest.
Today we live in a world that doesn't protect buyers/consumers like it did...complacent buyers beware. If I was a buyer without a lifeline, I'd be paying close attention to the wheat technical/fundamentals.
As producers, paper replacement strategies/discussions under circumstances....when there are fundamentals...not rhetoric suggesting that wheat is not a dead horse....are good discussions to have. And the sooner the better.
Basis...IMO...attractive basis will erode on futures lift as cash goes sideways. Protein/grade spreads may play big...should but likely won't.. signing basis up kills the trade from ponying up futures...kinda against the ropes with current spin. Get spread but lose basis...or vice versa likely the winter scenario. Could last longer...might not. Million dollar question. Timing and what a good basis is nowadays is a major wildcard....too many moving parts.
Never looked into/considered winter pool option...will though.

[mbdog]

I can't change the circumstances the market throws at me. If I have to sell...for whatever reason that may be...be it cash flow, basis commitment, storage, keepability??, whatever....reowning paper is simply an option I consider.

[mbdog]

re: high quality rsw. I locked in some march basis...hoping for a lift in futures...hoping for an additional grade premium. Like playing the lottery.
Rest sitting in bin... still left hoping for grade spread to play out somewhat like the untradeable durum/malt price in the cash/spot market.
If cash erodes from here....cash advance for me and hold remaining for now.