Canola producers continue to feel good about the market as cash prices have improved significantly since the start of October, according to Barry Coleman, executive director of the Northern Canola Growers Association.

Cash prices at the local crush plants on Oct. 13 ranged from $17.27 to $18.14 per hundredweight (cwt.) and the futures price on that day for the November contract stood at $525 per ton.

“We have seen the canola futures market go up to $530 and then went back to $513,” Coleman noted. “Now the market has climbed back to $525.

“The big catalyst was the USDA report on Friday, which revised soybean ending stocks to 290 million bushels (MB), which was at the lower end of trade expectations. That was a 170 MB decrease in the soybean inventory and it drove all of the oilseed complex higher and spilled over into the canola market, helping prices quite a bit.”

Trade analysts have said the $530 to $540 per ton is the resistance zone, Coleman noted, claiming that the market needs to feed positive news on a daily basis to keep this price rally in place.

“Weather news in South America and new of Chinese demand are the two main market features that everyone is watching right now that will drive daily movement in the commodity prices,” he said.   

Canola exports out of North American are continuing to run ahead of last year, according to Coleman. In the first nine weeks of this marketing year, canola exports are at 1.8 million tons (MT), which compares to 1.3 MT at the same time last year. Domestic use (or crush) is running at the same pace as last year.

“So we are seeing a lot more canola being consumed than we did last year,” he noted. “Also, farmer delivery of canola has been dropping off, which has helped canola prices, as well.”

However, heavy delivery of canola earlier in the year has meant the commercial pipeline of canola is pretty solid right now.

“STATS Canada released a grain stocks revision and they raised the canola stocks from 2.7 MT up to 3.1 MT and yet that didn’t have a negative impact on the market,” Coleman said. “This points to the strong demand we are seeing for canola right now. It’s interesting to see a revision like that caused no change in the market price.”

Finally, some market followers are predicting there will be a price rally for palm oil this coming spring. They are predicting a La Nina weather pattern will disrupt palm oil production in Southeast Asia and bring down the global supplies. This will have a positive effect on vegetable oil prices, Coleman noted and vegetable oil prices directly impact canola prices.

“That will be some bullish news that hopefully we can look forward to in the spring,” he noted. “There certainly seems to be good tailwinds for the oilseed sector going forward.”