What to do with unpriced canola

[wd9]

From the New Years resolution discussion in its own thread:

I'm sure I'm probably the only farmer without some prepriced/presold canola, but some possible options:

1. Store canola (assuming it is nice and dry) till the price goes up.
2. Buy paper till the price goes up.
3. Sell some every month as dollar cost averaging.
4. More options??

Given the current situation in excess supply, what is a good strategy to do unpriced/unsold canola.

[wd9]

JD4ME posted:

My thoughts on Canola marketing, well for unpriced canola it depends on cash flow needs,and what your traditiional strategy is. I would be monitoring basis levels and talking to crushers and elevator companies, they know theres lots out there and won't be working the basis any tighter than possible. I see the dollar started the trading year weaker and that may help. a little but canola has certainly been under pressure the last couple sessions. I think it depends on what your needs are though if you are an empty bin farmer then likely dollar cost average and replace a percentage on paper. If you have the bin room you can contract way out and lock in prices 16.5 % higher May 06 than now thats good interest on the money if you can cash flow from board grains or livestock.
We priced out Bins as we need more storage as it is the carry would half pay for the bin in the first year. Thats a 50% return on investment there.
Different farms have different needs and can react to situations differently.

[wd9]

From charliep:

Higher canola prices will be a tough slug short term. Too many US soybeans. South America is also looking good recognizing they are in the middle of their growing season. The loonie is the other wild card. My bias is higher eventually but have been wrong many times here.

[WRAPper]

I think you should get the ACPC to fund development of canola beer(the pulse boys now have pea beer though I thought the pee came last not first)
then the price would go up.
Shouldn't you be in a bar in some hotel somewhere??

[wedino]

I'm sitting on unpriced canola, as well. I've been thinking of setting up a commodity trading account for a number of years. Don’t seem to get around to doing it. Maybe find it a little intimidating or fear of trying something new. Any way a friend related to me a plan his broker suggested – soyoil put options to protect canola. March $.21 put cost $750US, March $.20 cost $360US. 1 soyoil contract would cover 3000 bu. Canola. What do you all think?

Another option – buy WCE Nov. canola if it drops to $270 - $280 range & hold for weather rally.

My bin doors are locked for a while. I don’t believe there is as much canola as traders think.

[les]

I predict the price of canola will sky rocket now because today I contracted mine for sale lol

[Incognito]

$7.50 over the March is bid at the Crop Production show in Saskatoon.

Not a bad basis for JANUARY!!

[melvill]

Incognito, who's bidding $7.50 over March? What is the delivery point? Is that for January or Jan-Feb delivery? Any quotes for Mar-Apr delivery?

[les]

bunge canada at ft sask.
jan-feb...5.75
march..5.89
april/may....5.75
Louis drefus..joffery plant
jan....5.94
feb...5.80

[Incognito]

8.00 the March this afternoon.

Lee:

All those high priced ANALysts failing you? ....LOL

[Incognito]

thats 8.00 over March...doesnt like plus signs, this board

[melvill]

still didn't tell me who's paying the 8 over and where.

[charliep]

Likely a crusher bid. See: http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agc5136?opendocument

Best bid here is $4 over but some negotiation/volume and achieving another dime a bushel should not be tough.

I will post the charts location (realatively tight trading range).

http://futures.tradingcharts.com/chart/CA/35

Only comments I have before I leave for discussion.

1) Make sure you are comparing all your canola prices at your bin and adjusted for grade, dockage, etc. It is not necessarily the best posted price that puts the most money in your pocket.

2) My recommendation remains to be a slow steady scale up seller. Too hard a market to call with downside potential still there (don't be in a panic sell situation down the road). I would be in no rush to replace with futures/options either and if do identify why you think think prices could go higher (canola, soybeqn oil, loonie, etc). If you do replace, keep in mind you are making an investment decision and not because you are mad you sold too cheap. Where will your money get the best returns?

3) New crop prices should also be on your radar screen both in terms of pricing new crop but as well in the specutlative strategy (if you go there).