Canola

[caseman]

Anybody think we will see $6.25 Canola anytime soon???

At one time I was hoping for $7 but now after reading several
articles it does not sound like even $6 will be attainable.

I have heard about two farmers checking canola bins lately and the
canola was heated. It turns $5.70 canola into $2 canola very quickly.

[Incognito]

Pravda is alive and well.

By the time you read it on Thursday night, it is already a week old and it is someone's regurgitated drivel.

From a wise old canola trader:

"Those that know, don't tell."

And thats why in the old rendition of "The Apprentice", keeners had to study him/shadow him for two years before being allowed in the pit, if they made it that long without being told anything.

Kinda comical now.

[nw9flynn]

I do not see any rally in the short term. The only bright spot with canola this year seems to be the IMC111RR. Contracted through Cargail @ $9.00/bu on the first 10bu. Then a premium is paid on the futures of the month that you deliver. The bad news is I am sure all the acres are booked by now. Maybe you will get lucky and rust will hit soybeans down south.

[charliep]

Where is your farm located?

The following is the link to Alberta's prices.

http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/agc5136?opendocument

The crushers have been at $6/bu with the premiums they have been offering. I suspect will be a struggle to push much higher in the current environment with downside risk (record south american crop on the horizon).

Where is Kernel when we need him? He was a user of grain pricing orders. I would have my marketing plan separated into target prices with the stuff that I am most worried about in terms of moisture going into the bin getting moved out quickly.

[caseman]

My delivery point is Davidson SK, today the price was at $5.55 at
SK wheat pool . Take 5/tonne for trucking that puts it at $5.44 .

Not a very attractive price ,I think I will sell all my canola if it ever
hits $6.15 --- $6.25 again.

[JD4ME]

JRI was offering a zero basis into July
today trying to get their crushing needs covered out that far. It works to 5.90 delivered in in South Western AB.
I the crushers get themselves covered out into July for less than 6.00 look out. we're going to need some help from cropping probs. in the US I'm afraid.

dang and double dang

[r.reid]

They had a BIG soybean crop down south. They won't every year. Asia rust could cut bean yeilds dramatically. I'm personally going to wait on growing the specialty IMC canola till they come out with a better yeilding hybrid. This coming up year I'm planting 5020 LL and 5070 LL on good pea stubble. All a guy can do is wait. The prices will come around. Guys also shouldn't be so stubborn and SELL when the price is half a$$ed good. Maybe should look at buying "paper" canola when the price is so low, sell it when it goes up. I have to be an optimist, I'm 26 years old..

[melvill]

When I talk to a farm manager about canola strategies, I encourage those with a futures account to sell cash seed when basis levels are good, (which they are at Alberta buyers these days) and buy back "paper" canola. The risk of paper canola is lower than seed because paper never goes bad in the bin. Most don't seem to understand that if the price of paper canola (futures) goes down, the value of their binned canola would have gone down, too, plus with binned seed, there's the risk of spoilage in binned product.

The paper canola purchase is a tough sell, though, mostly because many are afraid of margin calls if the market goes down after the bought their paper. (And, of course, most producers don't have futures accounts.) The idea that the $$ losses would have been the same if the seed was in the bin doesn't seem as big a risk.

I recently listened to a speaker talking about business risk who said that only the most sophisticated companies actually measure risk. He said that for most, the level of risk is based on perception. In other words, it's psychological.

[mcfarms]

The biggest reason I still shy away from buying things back on paper is the conception I have that if we all keep the product away from the proceesor and consumer until they are forced to ante up with better prices Its better to control the product at the farm gate.
I however know thats naive and that farmers can cross the street together without each wanting to do it their own "way" and that this strategy isn't happening in todays environment.
Lee years ago I took Mitcons commodity course and do have an understanding but would sure like to brush up before I waded in does Alberta Ag. have stuff on Ropin the Web or are their reources out their before I open this account. Also what do I look for in a company as far as opening a brokerage account where can I research them before going to that step.

[melvill]

mcfarms, you are partly right. The current very strong basis levels are a result of the past cold weather (reduced deliveries) and resistance by producers in selling canola (reduced deliveries) at the current low futures levels. Buyers can't individually influence futures but they can influence the cash price by strengthening basis.

Unfortunately producers can't have much of an influence on futures values, which tend to reflect the value of canola as part of the international oilseed market.

Actually there is quite a bit of info on RTW - sorry, Ropin' the Web. Look at:

Choosing a Commodity Broker at http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/sis7483?opendocument

Call me at (403)362-1344 and we can talk about some of the details. Not enough room here.

[mcfarms]

Thanks Lee
I may just phone you and drop by sometime I'm, not all that far from Brooks.
I've got some other stuff on the go I wouldn't mund some input on too.

[kenzie]

$6.00 is do able. Canola was $6.11 delivered to Crossfield 10 days ago. Here is a thought , do we producers have to change our price point of reference? Remember that $6 Canola was worth 25% more 2 years ago.
The Canola Council is calling for 10mmt of production to sustain the input,export and technology sectors of our business. So $4 bu to the producers right. How about sustaining the farmer?

[melvill]

The canola council isn't calling for 10 mil. t over night. Besides we probably couldn't increase production that much in a year or two. I think they're suggesting that, with proper market development, (especially including varieties that produce high stability oils) as the members of affluent societies of the world recognize the importance of moving away from hydrogenated oils, there's room for more canola production.

In addition, we (canola growers) had wonderful opportunities to forward price a portion of the 2004 production at prices considerably above current cash prices. I'm continuing to get calls from producers who are almost in panic mode because they've got none of the 2004 crop priced. I really wish more producers would use hedging (with futures) instead of forward pricing through the trade to manage price risk. Using futures doesn't require delivery if production is low quality or reduced.

By example, had a call from a producer the other day who forward priced 1/3 of his production at well over $8/bu using futures and an estimated basis of $15 under. He added some more as the summer progressed. Even with 30% unpriced, his average price for 2004 production will be well over $7.00. His next step is to sell the last of his cash at today's very strong basis levels and buy paper canola. He wanted to pick my brains about timing that. Of course, I can't give him an exact answer but he's thinking hard.

Pencil farming pays! (End of sermon.)

[lohner]

Hopefully, now that I'm beyond 40, I'm mature (crazy) enough to use a trading account properly. I signed $0 basis contracts.
Shortly after pricing an amount I went long July at the market.
I know I need $7 to break even. If I own them for 18 months so what.
Historic downside risk $20/t.
My brokers won't use canola options. I won't either.
Choose a broker that doesn't go trawling. (stir activity in idle accounts)
Took me afew courses to learn. An Edmonton broker has an upcoming course @UofA extension. 1 day I think.
So hopefully No more unintentional speculating.