February 21st: GrainCents Canola Sales Position Update

Good Afternoon!

2017/18 (old crop canola sales)

Increasing from 50% to 60% sold, selling 10% off the July 2018 contract and also pricing out the futures on our basis play from a month ago on January 16.


2018/19 (new crop soybean sales) 

Increasing from 0% to 10% sold, selling 10% off the January 2019 contract. 


Click here to post your old and new crop canola on the FarmLead Marketplace.

Your posted FOB farm price should be equal to locally delivered prices and then negotiate lower from there.

Obviously, we also recommend you shopping the local options.

If you are looking to just do a basis play at this time, on the new offer page, put in $0.01 in the price field and then indicate in the Comments section what sort of value you’re looking to negotiate from. This can be very regional dependent, but a good rule of thumb is to take the local basis value for new crop and take $4 – 6 / MT off it and negotiate from there.

Also, here are some current canola bids on the FarmLead MarketplaceMost bids are off the November contract so in a counteroffer, just change the movement period to December 2018 and the futures contract will automatically adjust to January 2019. 

canola-post-new-offer


A little more than 5 weeks ago, we made a basis play on old crop canola, moving from 40% to 50% sold. We recommended locking in a basis and then pricing the futures off the March 2018 contract. At the time, the March 2018 contract was trading around $490 CAD / metric tonne. Today, it’s trading just under $509 CAD in Winnipeg. That’s a nice 5-week again, especially as we’ve seen basis widen about $4 – 8 CAD / metric tonne (regionally-dependent). 

On our other 10%, 2017/18 old crop canola sale, we’re pricing it off of the July 2018 contract (priced currently at just under $520 CAD / metric tonne).

We acknowledge that there may be more price premium added to the canola market thanks to the move in soybean prices. However, soybean prices have been moving because of Argentine weather issues.

Since we know that canola prices and soybean prices trend together but are not symmetrical, and that soy oil has been languishing, relative to its soymeal partner, further upside for canola prices could be limited. More specifically, a $5 / tonne move in soybean prices might only see a $2.50 / tonne move in canola prices. Plus, you have the threat of local basis widening. 

For our new crop sale, the main factors echo what you saw in this past weekend’s canola weekly digest

 1. Canadian Loonie increasing strength;
2. A 2 million tonne carryout in 2017/18; and
3. The large amount of vegetable oils still available. 

One other factor that we can easily account for is record canola acres in 2018/19 in Canada. With any higher canola prices from here on out, you know AAFC’s forecast of 24 million acres is more likely to become reality. 

Further, we said at the beginning of 2018 in our Canola Market Outlook, that we would start looking at new crop sales for net farmgate prices around $11.20 CAD / bushel and we’re here today. The January 2019 contract is trading around $516 CAD / tonne and paying about a $5 CAD / metric tonne premium and I’m willing to take that and deliver it in before Christmas time. 

Again, while we do acknowledge the possibility of more upside for canola prices, the risk isn’t as great as the reward right now for this 10% of the new crop and 20% of the old crop (10% from the basis play and our new 10% sale).

We’re selling into this strength and managing the exposure of our unpriced canola to the market. 

Brennan Turner
President / CEO

1-306-715-4540 (cell)
b.turner@farmlead.com
FarmLead – North America’s Grain Marketplace 

COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.

About the Author
Sarah Bader

Sarah Bader is a science communicator, dedicated to cutting through jargon and getting to the heart of the matter. A lifelong nerd, communications allows Sarah to share her love of science and tech with a wider audience. Sarah has a BA in Communications and Sociology from the University of Ottawa.

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