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Canola markets continue to strengthen for several reasons

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canola chart

Canola market prices

The canola markets are on an upward trend, with prices now at levels we haven't seen since June, according to Barry Coleman, executive director of the Northern Canola Growers Association. Coleman can point to several main reasons why the canola markets continue to strengthen.

First, there is two million tons of unharvested canola that will be taken off in the spring, and Coleman expects what is harvested in the spring will have low quality.

It's going to have higher dockage, higher moisture and lower oil content, he said. It will likely be destined for the export market, rather than being crushed right away. They will want to move it as soon as they can after harvest."

We are also seeing a large commercial demand for canola as we move through the seasonal strong period, Coleman noted, pointing to the second reason for higher canola prices at this time.

"Right now the crush for North America is higher than it was last year at this time," he said, "and exports are on par so the total demand is exceeding the year ago levels and we have smaller available supplies, because of the unharvested acres, which is causing a rally."

The third reason for increasing prices is the Renewable Fuels Program, which had figures released by the Environmental Protection Agency around Thanksgiving time. This increased the amount of bio-fuel that will be produced in the U.S. and will increase the demand for both soyoil and canola oil in the production of bio-diesel.

The bio-diesel industry is a growing industry for canola, he said. The plant in Velva produces canola oil for the bio-fuel market, along with an additional plant in Washington state. The plant in Velva, N.D., can produce up to 50 million gallons per year. Canola oil currently accounts for around 10 percent of the bio-fuel market and that market share definitely helps the canola industry, he added.

Finally, Coleman said the Canadian dollar has been deteriorating, hitting an eight-month low recently, which is also helping to bolster canola prices.

Looking ahead to the upcoming spring, canola acreage is expected to remain steady from last yearÕs planted acres. Acres seeded in 2016 were near record levels.

Cash canola prices for January 2017 delivery ranged from a high of $17.82 per hundredweight (CWT) in Enderlin, N.D., and the low price quoted was $16.91 per cwt. at the ADM plant in Velva. Prices quoted from the Northern Canola Growers Association website, that has a cash price listing for all of the canola plants in the region.

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