Canola prices continue to look favorable as the counter-season price surge continues to have life. The market continues to consolidate recent gains, according to Barry Coleman, executive director of the Northern Canola Growers Association.

“Canola futures could correct themselves down $15 to $20 from where they are at right now and we would still be considered to be in an uptrend,” Coleman said.

The latest canola futures price for January futures quoted on Oct. 27 as $544 per ton. The cash price at local crush plants in the region ranged from $17.83 to $19.00 per hundredweight. Both futures and cash prices have seen improvement over the final two week of October, he noted.

“Crush margins are high and profitable and export demand remains very solid,” he said. “The export of canola out of North America is running 40-50 percent above last year’s level. Domestic demand is running neck and neck with last year’s figure. We are seeing a really robust demand for canola.”

There is about a 5 million ton supply of canola in the commercial pipeline right now, which is a very comfortable level for the time being, but that supply will be depleted soon and some are worried that the 12-month demand will not lessen anytime soon. Therefore, some market analysts are suggesting incremental sales of canola, while others are saying it is too early to see any lasting trend that would result in a downward movement of the market and growers should hold off selling until spring.

Adding to the positive oilseed market news is the fact that weather conditions in South America, although improved lately, will result in the crop being harvested about a month late. It is thought the U.S. will grab a lot of those delayed South American sales, which will further tighten the ending stocks of U.S. soybeans and increase all of the oilseed markets.

Coleman said there are two large unknowns in the oilseed market at this time – the first being the demand China may bring to the market and the other is the weather in South America.

“Three months ago it was thought the U.S. soybean stocks would continue to be burdensome,” he said, “but that has changed in just a few months to say they may now be tight.”

The statistics reporting agency out of Canada reported that world canola production indicates that ending stocks for canola worldwide will sharply tighten with a level of 5.2 million tons. This is down from 6.7 million tons last year and 9.4 million two years ago. Most of this decline is going to occur in Canada, but we will also see a tightening up in Europe, as well, according to Coleman.

“They say this tightening to world stocks will continue to support a price premium for canola. So it looks like bullish news on both the supply and demand front going to forward,” he concluded.