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Discussion Starter #1
Something fishy is going on in the canola market. Since harvest the excuse we have been hearing for the $4-5.00 difference in price to soybeans is that the soy/palm oil prices were low, thus canola prices have to be lower. The reason being that Soybeans are about 65% meal and 35% oil, whereas canola is roughly the opposite- 35%meal and 65% oil.

Now for the last while soy/palm oil has been rallying and canola is actually losing more value compared to soybeans....what gives? As I type, soybeans are up 18 cents a bushel, and canola is down 20 cents a bushel. It is frustrating to say the least. The markets seem to have totally disconnected from their true value indicators and have taken on a mind of their own.

What do you guys think is going on? How much canola is still out there?
 

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From what I can see in our area the is a lot of canola in the bin still. Not sure if it is contracted or not.
 

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The canola crop was good, but it wasn't the best ever (in eastern Sask anyway). Combine that with the next to 0 carry-over into fall of 2013 and I think it is getting chewed up at an typical rate.

As far the price difference versus soy, I don't really have an answer, but a guess would be the spec $ coming out of canola. If I WAS a conspiracy theorist, I would say that the same people causing the wheat shipping delays are driving the cash canola market down to make it cheap to buy, and force farmers into selling canola at a discount which it the only crop that is moving. Logic seems to be out the window, and think I should just start throwing a dart at a calendar for contracting grain.
 

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Greed. Mind games. And they know we have been profitable over the last few years so here is their golden opportunity to take some cream off of the top. What a slap in the face to every producer in Western Canada. And the frustrating part is that collectively we hold all the cards but we never use them properly. We have the royal flush, and they have nothing, and we continually fold. Pathetic.
 

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Something fishy is going on in the canola market. Since harvest the excuse we have been hearing for the $4-5.00 difference in price to soybeans is that the soy/palm oil prices were low, thus canola prices have to be lower.
Soy oil peaked (roughly) at 60 cents, about 40 now. 2/3's.
Canola peaked at 600$, about 400 now. 2/3's.
This is fishy how?;)
 

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Discussion Starter #6
Have been told by the elevator that crop in Alberta was avg, but sask crop was HUGE. Interesting that you say the crop wasn't the best ever blackdirtfarmer.

What do you have in mind, Chris, that we as farmers can do in order to level the playing field?
 

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If I hadn't been wrong so many times in the past, I would be buying canola futures right now. But with the wild markets there is nothing holding canola from dropping more.
 

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I sold the rest of my canola about 3 weeks ago to a crusher. The basis was very good but the posted basis was much worse. I put a target in and they moved to meet my price. What I was told was that if they were to post the basis they gave to me they would have more canola than they could possibly need! This tells me that somebody has some canola unsold in the bin.;)

The crusher's/elevators will gladly buy all the canola at poor basis levels and supplement that by picking off target's. Why would they post a low basis for everyone to have when lots of guys are selling into the high basis.

As for futures my sense is that we are seeing panic selling and probably technical selling. The spread is almost such that one could start buying canola and binning it for next year or doing a spread trade with beans/canola???

It doesn't have to make sense and markets over-react all the time, this appears to be a big over-reaction. Someone with deep pockets and patience will use it to their advantage, will it be farmers???......probably not.:rolleyes:
 

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Once the ball gets moving one direction it becomes hard to stop and turn the other way. I bet their was a ton of longs that got stopped out the past to days in. Now this works both ways.

I figured we found a floor at 420. But the passed days have proved that wrong. Are we gonna hold at 400? Maybe but its too soon to tell.
Also Mar 11 2010 canola was under 400 and remember that turning out to be a pretty good yr. So don't beat ure self up to much.
 

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Discussion Starter #12
It is just discouraging that they have used the soy oil reason to push prices down, and yet since the beginning of February the soy oil price has risen about 4.5% and canola has fallen about 7%
 

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I think logogistics are the reason the cash price spread is not following soys however futures should climb either put in targets or wait till dollar hits 85 cents and sell it to adm at velva nd
 

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It wasn't that long ago 10 years maybe that $9.00 bu was a good price. and the best yields were 30 bu/ac. round up was $25/l ac., You should be able to make a profit at $9.00/ bu with your 40bu/ac crop.
 

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Neil, I don't think you could have a better day than today from a point making, point of view
Canola 394.00 down 13.50 /-3.31%
Soy oil 39.54 up 0.55/+1.41%
 

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Discussion Starter #16
It wasn't that long ago 10 years maybe that $9.00 bu was a good price. and the best yields were 30 bu/ac. round up was $25/l ac., You should be able to make a profit at $9.00/ bu with your 40bu/ac crop.
Yeah, but seed was $250-300 per bag and they were 55lbs bags too. Nitrogen was $300/tonne, rent was $25/acre....so maybe margins were actually better back then. Nobody is saying that they can't make a profit on $9.00 canola. I am simply saying that the reasoning we as farmers are being fed for canola dropping (soy oil prices) isn't being followed in turn when the price of soy oil increases in price. (soy oil prices going up should equal canola prices rising as well)
 

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Discussion Starter #17
Personally I think we gap lower tonight and into the morning and then finish the day stronger....pending soybeans continue their winning streak. This would signal a bottom for me in canola prices.

If the price is up tonight, I think tomorrow will be a down day. But what do I know....I have been wrong more than I have been right calling this years markets.
 
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