As of 1:00pm Friday March 16, 2012, ICE Futures Canada May canola futures closed at $599.80/ metric tonne. That being said producers may want to start looking to lock in forward pricing contracts for their 2012-2013 canola production. ADM Llyodminster September new crop canola bids are at $12.30/ bushel as of Friday march 16th and December bids at $12.38/bu. Producers may want to call their local elevators and discuss new crop contracts and new crop market managers.
A few cautions to think about when talking production contracts: One: ask if there is an act of God clause attached to the contract. Some production contracts do not come with an act of God therefore the producer is responsible for the bushels contracted. Second: Keep in mind the average production your farm has produced over the past ten years. Some common mistakes are over booking bushels. Most recommendations are to book a portion of your average production. For example if the average canola production for you farm over the last ten years was 27 bushel/ac a recommendation would be to lock in 10 to 15% of that production. Third: when discussing new crop production contacts or market managers don’t forget to ask about the basis. Some contracts will have a fixed basis others do not. Another idea would be to lock in a basis and float the markets.
Going into the near future Canola appears to be a strong commodity. With weather issues throughout the world there could be strong demand for canola in 2012 and 2013. I would advise producers to keep an eye on the markets. Discuss production contracts and market managers with your local elevators and grain buyers. With prices over $13.50 per bushel the landscape could have lots of yellow this summer. Keep this in mind when you make your final seeding plans this spring and good luck and happy farming!
Ramblings from Dan