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Canola opens 2021 with continued surge in prices
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Canola opens 2021 with continued surge in prices

Canola

Cash canola prices have increased about $1.50 per hundredweight (cwt) since December, according to Barry Coleman, executive director of the Northern Canola Growers Association. Local crush plant prices on Jan. 20 ranged from $21.68 to $22.75 per cwt, depending on location.

“The markets were off sharply yesterday and down slightly today on thoughts there has been a fair amount of rain in South America,” Coleman said during a Jan. 20 interview.

Futures prices have also increased sharply over the last month. The March contract has been as high as $684 per ton, but dropped down on today’s market, he noted.

“This price is just below the 20-day moving average and they are saying it is one of those major market reactions when we see prices go so high that we see market volatility take over just briefly,” he said “That is something we probably see through the spring.

“The overall thoughts are that the Brazilian crop has stabilized, while the crop in Argentina is still dropping in expected production. Most people don’t believe things have turned around in South America because of the rains,” Coleman added.

The levels of export and domestic crush still remain at unstainable levels, according to Coleman, when you consider the tightening supplies expected this spring. The ending stocks are forecast to be 1.2 million tons or maybe even lower.

There continues to be concern over dryness in South America, especially with the fact that palm oil stocks have hit a 13-year low. The palm oil situation, along with the weather in South America and increased purchases by China are adding support to the world vegetable oil market. It is still estimated that 15 percent of this year’s palm oil production will go unharvested because of COVID-related labor shortages in that part of the world, Coleman noted.

The mid-January USDA Annual Crop Production Report increased the average canola yield in North Dakota from 1,770 pounds per acre to 1,960 pounds.

“That ties the highest canola yield record in North Dakota and that is about a $50 million increase as the crop is now estimated at 2.9 billion pounds and the U.S. total canola production is estimated at 3.5 billion pounds,” he said.

Finally, those in the canola industry are still expecting a significant increase in canola plantings in North Dakota this spring, Coleman noted, and that is due to favorable market prices at this time and little change expected in the near future.

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