Canola cash bids looking strong to start year

(Commodity News Service Canada) — Canola cash bids are looking strong at the start of 2011 and could remain that way heading into the spring, as demand remains brisk and end-users tighten their basis levels to make sure they get enough supplies.

Spot canola bids can currently be found as high as $12.88 per bushel, delivered to the elevator, across Western Canada, according to the latest Prairie Ag Hotwire data.

Those top-end prices are generally a 50-cent improvement, give or take, from where they were a month ago.

While farmer selling is expected to see an increase to start the year, the country movement should not weigh on bids too much, according to Toby Torkelson, vice-president of Rayglen Commodities in Saskatoon.

“Ultimately, the market will watch the Argentine situation and the developing crops there,” said Torkelson adding that “the market will determine its direction based on what beans do, rather than farmer selling.”

Torkelson said basis levels were already starting to tighten, indicating there may be some concern amongst commercials over having enough supplies for March and April delivery.

“I don’t see those basis levels getting out of whack, and the cash prices will be determined by soybean-led futures, less normalized basis levels.”

Bids could get fairly aggressive for June/July delivery, as supplies will be very tight by then, he added.

“Our exports and domestic crush is moving at an excellent pace, and we will find things exceedingly tight,” said Torkelson.

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