The month of February was not kind to canola prices, according to Barry Coleman, executive director of the Northern Canola Growers Association. Cash prices declined significantly with the cash price on March 5 ranging from $15.36 up to $16.10 per hundredweight.
“The whole situation seems to be revolving around that Chinese executive who had been detained by Canadian officials. China has now officially reported that they have halted imports from Richardson Grain, which is the largest grain company in Canada,” Coleman said. “Halting canola imports certainly has rocked the markets. Last Friday (March 1) the futures were down $6 to $7 dollars per ton which means the prices have declined $35 a ton in just the last few weeks.”
The canola-soybean price spreads hit fresh contract lows as the premium of canola over soybeans was the smallest since March of 2018. Outright canola futures traded at the weakest level since August of 2016, Coleman noted.
“It is certainly concerning to the canola industry. The canola growers in the U.S. and Canada are being affected by this and there is some talk that there will losses for other commodities in Canada, which would hurt the entire commodity sector, so we are hoping things get resolved.”
Canola also entered into undervalued conditions with respect to the supply and demand and in relations to competing oilseeds. It seems economics has taken a backseat to politics, as China is flexing its muscles, Coleman noted.
The crop insurance price guarantee levels are down for canola, as well as a lot of other commodities. The price guarantees are discovered during the month of February by looking at the November futures price, in the case of canola as well as some other commodities, according to Coleman. These prices are then established during the month of February for the coming year.
So, there is little news supporting canola prices at this time and he said there might be a request from canola growers for some Market Facilitation Payments to them this year if the prices don’t improve, he added.
In the past the canola growers have not been allowed to take part in the Market Facilitation Payments, but Coleman feels this incident caused by the arrest of the Chinese executive has had a direct impact on lower canola prices by a significant level and some compensation is needed to canola growers.
In other canola news, the Northern Canola Association board of directors recently approved a quarter of a million dollars in research grants to 10 different canola research projects. One of the prime projects will be a ‘beefed up’ clubroot survey over many counties in the northern regions of North Dakota. This will look at the number of clubroot spores per gram of soil and provide more evidence on how heavy the infestation is and where it can be found, what role does soil pH play in clubroot. The project facilitators will also hold a group of educational meetings on how they can prevent clubroot from becoming a real issue in the state.