Canola now what

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Canola now what

Mar 10, 2018 | 20:43 1 Monday should give some good indication. All depends where we are in the cycle
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farmaholic's Avatar Mar 10, 2018 | 20:59 2 Isn't it time for profit taking and have funds drive it lower? ....again.


Still no more canola than there was 5 days ago.

Reality versus perception about recent precipitation....one snow storm isn't a drought buster. Weber's newsletter still highlights a huge deficit in my area....and deficiencies in others.

Soybean meal

Domestic crush margins

Expected improved rail movement going forward.
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Mar 10, 2018 | 21:23 3 I hear saskatchewan is growing canola this year so here in mb we will grow wheat and beans. Fucked the lentil market now time to flood the canola market and spread some clubroot
Last edited by bgmb; Mar 10, 2018 at 21:34.
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Partners's Avatar Mar 10, 2018 | 21:50 4 Crushers booked up for 2 months..no rail cars..
No one knows..the bad joke continues.. Reply With Quote
Mar 12, 2018 | 07:09 5 Drag on ICE canola is coming from the beans . . . China warning of U.S. soybean tariff retaliation. Bean technicals turning down and definite risk of further fund liquidation (IMO). Reply With Quote
Mar 12, 2018 | 10:19 6
Quote Originally Posted by errolanderson View Post
Drag on ICE canola is coming from the beans . . . China warning of U.S. soybean tariff retaliation. Bean technicals turning down and definite risk of further fund liquidation (IMO).
Errol. Is this 5 years in a row that your wrong or is it more. Again canola rises in Price right into spring
Again we get to $12 and more actually just last week. I ask Larry Weber this exact question. Analyst always bearish and every year it hits $12 and more in March April. Weber said this year was different and no real chance of $12. Just asking the question? Reply With Quote
Mar 12, 2018 | 14:11 7
Quote Originally Posted by vvalk View Post
Errol. Is this 5 years in a row that your wrong or is it more. Again canola rises in Price right into spring
Again we get to $12 and more actually just last week. I ask Larry Weber this exact question. Analyst always bearish and every year it hits $12 and more in March April. Weber said this year was different and no real chance of $12. Just asking the question?
vvalk . . . at least I'm good at one thing . . . being wrong. Reply With Quote
Mar 12, 2018 | 15:04 8 Errol

keep us up to date on market conditions. Your insights are much appreciated.

What are your thoughts on soy oil and palm oil stocks to use going forward the next 6 months.

What are the crush margins like these days

How are canola stocks looking domestic and international?

The painting is abstract but those with insight can make out what the artist is trying to create.

Trying to consistently and Accurately Predicting the future of a market direction that is driven by not yet known events.. those are the silly folk

Again, much respect for your willingness to share. It’s a sign of your passion for analysis and we in the ag protection are lucky for this. Reply With Quote
Mar 12, 2018 | 16:03 9
Quote Originally Posted by errolanderson View Post
vvalk . . . at least I'm good at one thing . . . being wrong.
Yes, Errol, please keep the informative posts coming. I don't expect you or anyone else's analysis to be right every time, but sure do appreciate the facts you bring to the table. Not sure why you or other knowledgeable posters are willing to subject themselves to scrutiny on a public forum for information you post for free. But thanks for doing so. It is refreshing to read actual relevant marketing information on the commodity marketing forum. Reply With Quote
Mar 12, 2018 | 16:47 10
Quote Originally Posted by AlbertaFarmer5 View Post
Yes, Errol, please keep the informative posts coming. I don't expect you or anyone else's analysis to be right every time, but sure do appreciate the facts you bring to the table. Not sure why you or other knowledgeable posters are willing to subject themselves to scrutiny on a public forum for information you post for free. But thanks for doing so. It is refreshing to read actual relevant marketing information on the commodity marketing forum.
I second that. Thanks for your info. Facts and how things play out will make us hero’s or zeros. Economics and sociology are social sciences and involve humans which don’t always act as expected. Reply With Quote
Mar 12, 2018 | 18:11 11
Quote Originally Posted by errolanderson View Post
vvalk . . . at least I'm good at one thing . . . being wrong.
Not trying to be a dick but just saying lots of farmers sell based on these predictions and it’s means a lot to some families livelihoods. I get frustrated when it’s always negative and every year by spring we reach prices analysts swear won’t happen. Even when they are called out it’s “ this year is different” and every year they are wrong. Id you get paid to forecast you have to expect criticism Reply With Quote
Mar 12, 2018 | 18:40 12 VValk if every year higher prices are achieved in the spring why do you need someone to tell you that? Reply With Quote
Mar 13, 2018 | 03:01 13 Just locked in most of last years canola which is all a #3 due to green seeds for $10.53 which I think is great considering it’s quality.

Speaking of forecasting/predicting they were talking on the radio that they can now predict where lightning is going to hit in the forest and start a fire. I kinda have a hard time believing that when they can’t get the weather close to start with. Last week we were supposed to hit +12 on Wednesday which they kept pushing back till today and now it’s been dropped altogether. It’s gotten to +2 and that’s what they’re calling for the rest of the week now.

Take any forecast or predictions with a grain of salt. After all they’re created by humans😉 Reply With Quote
Mar 13, 2018 | 03:42 14
Quote Originally Posted by wiseguy View Post
They’rev paying close to $ 12 because she’s in short supply !

The grain cos ain’t making enough money !

As soon as there’s a crop they’ll be giving $ 5 a bushel !

Surprised the runs lasted this long !
She was in short supply “here” after mudding the crop in late this spring and fighting snow/mud all fall too. Not sure who has this record crop (according to StatsCan😉) since it’s not us. Reply With Quote
Mar 13, 2018 | 09:37 15 Today's action very bullish after the gap lower star pattern yesterday.

Will need rest of today and tomorrow to give direction. One green bar doth not a trend make Reply With Quote
Mar 13, 2018 | 11:54 16 So could perfect storm be brewing. China tariffs USA beans, needs more of our canola, dryness in western Canada, and supplies are shorter than we think. Reply With Quote
Mar 13, 2018 | 12:13 17 Pricing through the winter months is always ( more or less stable, reacting to currency and outside markets).

Always in the spring and summer the greatest volatility = opportunity
- sell inventory (physical)
- currency
- use futures or options for speculation ( no such thing as a hedger 100%)
- weather risk (physical canola supply)

This is the time of year when what happens in western canada matters,
-seeded acres
-supply of physical ( sold or committed under contract)
- unpriced or unsold grower inventories on farm
-exporter positions long vs short,
- buyers overseas, crushers assess needs, opportunities and risk for canola supply and bid and buy accordingly Reply With Quote
Mar 13, 2018 | 13:42 18 Thx for the insight 101 . Reply With Quote
Mar 13, 2018 | 14:41 19 read somewere in last few days that up to 70% of farmers sold a at least a portion of there beans at or near $12 good disicpline Reply With Quote
farmaholic's Avatar Mar 13, 2018 | 18:38 20 Nice bounce in canola. Hope it keeps going.
...."one" of these times one-0-one....one of these times I will price....but I'm not waiting for $13.50 because I don't have what it takes.

I always look forward to getting off the roller coaster. It gets nauseating after a while. Reply With Quote
farmaholic's Avatar Mar 14, 2018 | 06:49 21 $12/bu commodity canola....will it keep a lid on a higher price? Bin doors will open and they would get what they need. If the spring is hot and dry...what's possible? Does the recent dip in the futures lower your expectations or is it psychological market warfare/torture. Reply With Quote
Mar 16, 2018 | 06:49 22 New crop price protection: For growers starting to scale-in new crop canola price protection, here's an put option idea that catches our eye . . . .

A January $520 put option is now trading around $20/MT.

Jan strike price $520/MT - $20/MT premium = $500/MT ($10.88/bu) - your fall delivered basis.

January options expire near Xmas.
Advantage of Jan puts over Nov is a growers might be able to secure a better delivered basis under Jan.
Also, the owner has no production obligation. No risk of payout penalties if unable to deliver. Reply With Quote
farmaholic's Avatar Mar 16, 2018 | 06:55 23
Quote Originally Posted by errolanderson View Post
New crop price protection: For growers starting to scale-in new crop canola price protection, here's an put option idea that catches our eye . . . .

A January $520 put option is now trading around $20/MT.

Jan strike price $520/MT - $20/MT premium = $500/MT ($10.88/bu) - your fall delivered basis.

January options expire near Xmas.
Advantage of Jan puts over Nov is a growers might be able to secure a better delivered basis under Jan.
Also, the owner has no production obligation. No risk of payout penalties if unable to deliver.
But Errol, GrainCos were offering $11.00 for Jan/19 DDC. I bet they call that contract in early...maybe not off the combine though. Reply With Quote
Mar 16, 2018 | 07:14 24
Quote Originally Posted by farmaholic View Post
But Errol, GrainCos were offering $11.00 for Jan/19 DDC. I bet they call that contract in early...maybe not off the combine though.
Farmaholic, put option protection generally offers slightly lower return than fall DDC cash contracts, but there is no production/delivery obligation. No margin call risk. We suggest growers start with DDC contracts up to their comfort level and beyond that start scaling in put options.

My favorite strategy is to scale-in put options into a raging bull weather market, should it occur. No one knows where the top is. All we know is there is a peak and then sudden drop. There is a risk to signing a DDC contract as your own production may be threatened.

Realize this is now water-under-the-bridge, but this put option strategy was a very effective strategy during the 2017 run-up in Minneapolis spring wheat. Some growers cashed in-significant gains and protected profits with just lonely put options. Reply With Quote
Mar 16, 2018 | 07:21 25 It's insurance.
To speculate, load up on cheap out of the money options. Treat them like penny stocks and see what happens Reply With Quote
farmaholic's Avatar Mar 16, 2018 | 07:27 26 Thanks for your input. But deduct an average basis from that price and it doesn't excite me much. Another 20$ basis deduction leaves me a bit under $10.50/bu.

No one can predict what the basis will be but what's your opinion of an average Jan basis?

Edit.

Just checked some local bids.... Nov $10.90-10.96. Jan $$11.00-11.12 Basis...fall months $31-37(ouch for now--looks like we might be paying for someone else's "insurance"...lol)
Last edited by farmaholic; Mar 16, 2018 at 07:46.
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Mar 16, 2018 | 08:06 27
Quote Originally Posted by farmaholic View Post
Thanks for your input. But deduct an average basis from that price and it doesn't excite me much. Another 20$ basis deduction leaves me a bit under $10.50/bu.

No one can predict what the basis will be but what's your opinion of an average Jan basis?

Edit.

Just checked some local bids.... Nov $10.90-10.96. Jan $$11.00-11.12 Basis...fall months $31-37(ouch for now--looks like we might be paying for someone else's "insurance"...lol)
farmaholic . . . good comments. Every farm operation is a different risk appetite . . . may depend on debt load. Some operations are quite aggressive with options, some don't use them at all. There is no right or wrong answer.

Remember, if you are using puts for price protection, the best case scenario is to watch them expire worthless. If they expire worthless, how high did the cash market go? That great news. But if the market turns grumpy, put options can be profit-savers. This is your own 'pure managed price insurance', without government involvement. You are the boss and have total flexibility . . . . Reply With Quote
Mar 16, 2018 | 08:09 28 This is only for reference and is not based on actual elevator basis(and I haven't updated for a while but it is based on a ten year period 2007-2016):

Average SK basis for delivery in Nov/Dec is -31.30
Best basis was +12.83 in December 2012. Cash price was 599.33
Worst was -68.40 end of December 2010. Cash price was 508.90

Average cash price over the period was 450.55 Reply With Quote
Mar 16, 2018 | 17:40 29 Seen this , I know it’s been dry in Argentina but ..... Reply With Quote
Mar 17, 2018 | 08:54 30 Soybean fundamentals and focus are now nearing a shift (IMO). Focus will now shift toward the U.S. from South America. U.S. soybean acres will likely exceed corn this spring, (the 1st time ever) possibly exceeding 92 million acres. If yields are similar or exceed a year ago, this will swell U.S. stocks-to-use ratio possibly above 15 percent.

Some U.S. analysts are now projecting soybean futures to once again break below $10 per bu under these circumstances. This scenario would also impact new crop canola . . . . Reply With Quote