Applied Economics William W. Wilson, Professor, Department of Agribusiness and Applied Economics Contents Highlights Price Risk Management for Canola Producers in the Northern Plains Marketing Alternatives Price Analysis Comparison of Marketing Strategies Market Planning References Appendix A. Managing Risk Highlights U.S. canola production is small compared to other countries, although it has grown rapidly in recent years.
Production is concentrated in northern North Dakota.
Canola producers confront risk, even though canola often competes well economically with other crops. The objective of this study is to analyze price risk management strategies for canola growers in the Northern U.S. Plains. Canola is not traded on a U.S. futures market but it is on the Winnipeg Commodity Exchange. The contract price is for a par region, which is an area around Saskatoon, Saskatchewan. The expected price from hedging canola is the Winnipeg Commodity Exchange canola converted futures price adjusted by a typical basis, less brokerage fees and interest cost on the margin money held by the brokerage firm on the futures hedge.