The canola markets have been bouncing all over the place lately. “Whipsawing” back and forth is the best way to describe the market, according to Barry Coleman, executive director of the Northern Canola Growers Association. The May futures price was at $739.00 on March 2.
“The futures price was down the limit a couple of days and up the limit one day,” Coleman said. “We are really seeing some volatile action in the markets. The new crop futures haven’t been as volatile as the old crop futures, but they expect the volatility to continue.
There appears to be a real effort underway to buy 2021 acres right now.
“The crop insurance price for canola came out at 20.6 cents per pound, which is the highest in eight years and 25 percent higher than last year’s price selection, which means the crop insurance guarantees are very attractive for canola and should help with planting intentions. We have better final planting dates and several other positive factors in the insurance plan now,” he said.
The cash market prices on March 2 ranged from $24.70 to $26.90 per hundredweight at the local crush plants.
Reports from South America indicate they will continue to see dry conditions in Argentina and rain has slowed the harvest in Brazil, which will increase crop stress and is supportive to oil crop prices.
In its most recent oil seed report, USDA was prompted to increase the exports of canola out of Canada to 10.7 million tons (MT), which is 700,000 above their previous month forecast. The USDA report also forecasts that China will increase their canola imports by half a million tons to 3 MT and this will support their domestic crush of at least 15.5 MT in China. They also increased the European Union’s canola imports by 200,000 tons.
“They are saying the supplies of canola are going to get really tight,” Coleman stressed. “They are predicting an ending stock figure of 700,000 tons in North America at the end of the year. Previously that was 1.2 million tons and there is even talk that we are on a trajectory to run out of seed by July, which is something we have never seen before. In addition, we have a huge amount of major canola production acreage in a severe drought situation right now, so it has the makings for some interesting developments this year.”
In other canola news, there will be a “Getting it Right” canola production virtual meeting that will be held on March 16 and growers can go to the Northern Canola Growers Association website and register for that meeting.