March 1st: GrainCents Canola Sales Position Update

Good Afternoon!

2017/18 (old crop canola sales)

Increasing from 60% to 80% sold, selling 20% off the July 2018 contract. 

2018/19 (new crop canola sales) 

Increasing from 10% to 30% sold, selling 20% off the November 2018 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 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.

Last week, on February 21, we updated our canola sales position. Specifically, we made our first sale on 2018/19 new crop canola sales, in addition to moving to 60% sold on 2017/18 old crop canola sales.

In the past week, we’ve seen some healthy gains in the canola market (~$10 CAD / metric tonne) and so the intuitive question is, “why didn’t we wait to make a sale?” or the feedback that I get is “we sold too early”.

If you recall, this is specifically what I stated last week though: 

“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.” 

The better question to consider is how many times have you seen today’s price at the elevator in the past 3 or 4 years?

With this thought in mind, we’re recognizing these relative highs and we’re selling into strength.

For our 2017/18 old crop sales, we’re pricing 20% of production off the July 2018 contract, which closed today at $530.10 CAD / metric tonne ($12.02 CAD / bushel).

Keep in mind that there’s still 3 months left of activity for the July contract to act on but my guess is that any highs will be seen i the next 2-4 weeks (if not here already). This is also why we’re not moving to 100% sold on old crop b/c I do think that there could be some upside stoll, but I’m MUCH MORE cognizant of the downside risk at this point.

For our new crop sale, we’re pricing 20% of production off the November 2018 contract, which closed today at $517 CAD / metric tonne (or $11.72 CAD / bushel). We’re still extremely cognizant of downside risk here.

End all, be all, 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)
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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