(Resource News International) — The canola basis price has been widening of late, with buyers having ample product at the moment.
Errol Anderson, president of Pro Market Communications in Calgary, said there are a number of factors contributing to the current trend in market.
“The strengthening of the Canadian dollar isn’t good, with the Bank of Canada increasing the rates,” Anderson said. “The StatsCan stocks report (released Wednesday) was bearish as well.”
Gerald Klassen of GAP Grains in Winnipeg said that with the high canola prices that were seen in July and August, many producers were in a selling mood.
Read Also
U.S. grains: Corn rebounds from contract lows on short covering, bargain buying
Bargain buying and short covering lifted U.S. corn futures on Monday after the market slid to contract lows on expectations for strong U.S. output, traders said.
“The farmer had a large carryout, so what he did is he delivered a large volume of stocks prior to harvest,” Klassen said.
With a plethora of selling activity toward the end of the summer, exporters and domestic crushers aren’t looking for product right now.
“(Canola) buyers are just saying ‘There’s canola around;’ they feel there is going to be harvest selling pressure off combines,” Anderson said.
Basis levels could firm up toward late October or early November, he added.
There is another significant amount of canola to be harvested this crop year, but said there isn’t a demand for it at the moment, Klassen said.
“Now we’ve got a 10.8 million-tonne crop coming in. Probably a million of it wants to be delivered in the next 30 days,” Klassen said. “The market is saying ‘I don’t want it now, I want it two months from now.'”
The harvest is still in early stages because of excess moisture across the Prairies, Anderson noted.
Elevator deliveries for canola were bringing as much as $10.14 per bushel in Manitoba, $10.18 per bushel in Saskatchewan, and $10.37 in Alberta, according to prices provided by Prairie Ag Hotwire.
