The canola has been “grinding” higher over the first couple weeks of May, according to Barry Coleman, executive director of the Northern Canola Growers Association.
“(May 12) marks the sixth consecutive higher close and that continues a trend since bottoming out on April 23,” Coleman said. “The 20-day and 50-day moving averages have been cleared, so the July contract is trying to move up to the $475 per ton range, which is a 100-day moving average.
“Some marketers have been talking that the $470-$480 range would the point where they would encourage some further selling. If it would hit $480, that would be an important milestone for canola,” he added.
Some of the recent increase in canola prices is due to the fact that the supply of canola in North America is tighter than the trade once thought. Initially, they were looking at a 4 million ton carryover, but it looks more like a 3 million ton carryover now.
“That shows that stocks have tightened up for the canola market,” Coleman said.
The crush plant canola prices on May 12 were in a range of $14.44-$15.52 per hundredweight, which is up around 50 cents from the last report. The futures price on the ICE Exchange was at $472 per ton, which had increased by $1.00.
Oil crushers in the region have indicated oil sales are doing okay. They are selling to different markets since the sales to restaurants have kind of dried up due to the businesses closing. However, the canola oil sales at grocery stores have made up for some of the industrial or restaurant use.
In addition, the demand for canola meal has been holding out, so we haven’t heard of any dire news lately from the canola crushers.
The slow spring seeding pace has been supportive of higher canola prices, Coleman noted. In North Dakota, 11 percent of the canola has been planted – that’s behind 17 percent last year and the five-year average of 30 percent. One percent of that canola has emerged, but Coleman has heard the recent freezing temperatures have caused some damage to those fields in the southwestern part of the state.
The crop reports in Canada show they are behind in planting, as well, due to cool temperatures and dry soil conditions.
Finally, the export numbers are now running ahead of last year, after lagging behind by several months. Coleman said the export numbers are now running about one-half million tons ahead of last year, and that export pace is expected to continue and increase the gap from last year.