Protect Your Canola?

I’ve been paying close attention lately to the November canola futures.

On Oct 2nd, canola broke out of the sideways channel it was in since late June.

See chart above – it was trading between $440/ton to $454/ton approximately. 

The last couple of trading days the charts are giving some sell signals.

Here are some factors I always watch for canola….

What is the soy complex doing?

How is the Canadian Dollar trading?

Any weather to consider?

I’ve been reviewing with clients risk limited options strategies for protection given the rally we have seen.

One thing I have heard is how some producers think there could still be more upside in the price because of our Prairie weather.

Strategies that I implement still leave the upside open in case a continued rally does happen.

Also, remember when you protect using futures or options you don’t have any production risk.

You don’t have expensive penalties like grain contracts have if you cannot meet your obligation.

Every operation is different and I discuss with clients how much they already have sold.