(Resource News International) –– New-crop canola bids being offered by grain companies in Western Canada are seen as unlikely to attract the acres required to meet industry needs.
“Right now most new-crop bids for canola are under $9 a bushel, which is only going to cause area seeded to the crop to drop well below the 16 million-acre level,” according to Ron Frost, a grains/oilseed analyst with Frost Forecasting Corp. in Calgary.
The area seeded to canola in the spring of 2009 totalled 16.199 million acres.
“Producers have been advised at present to lock up their canola bins and don’t sell until well into February,” Frost said.
He acknowledged the new-crop bids being offered by grain companies were probably just feelers, deliberately lowballed. The glut of soybeans in the U.S. and world markets also doesn’t help, but canola was still expected to remain at a bit of a premium.
“Producers, who saw new-crop bids in the $9.40 region wanted to see those values climb to around $10 a bushel,” Frost said. “Now with most bids in the $8.50 to $8.75 region, producers want to see a value above $9.00 before they are going to seed any area to the crop.”
Frost cautioned that all crops have suffered a fairly large price drop as of late, which will require some additional penciling out before any final planting decisions are made.
Oat bids have dropped to around $2 a bushel from around $2.50 and new-crop ethanol wheat bids were now in the $4.35 range, while malt barley new-crop bids were seeing $3.75 to $4, with $4 stretching the upside, he said.
“I think producers will see if canola can hold out, and then see what kind of new-crop bids are being offered in mid-February, before deciding to plant the crop or not,” Frost said.
“Who knows, maybe new-crop canola bids of $8.50 to $8.80 may be enough to entice producers to seed the crop.”
New-crop bids for canola, delivered to the elevator, as per Prairie Ag Hotwire data on Jan. 20, in Saskatchewan ranged from $8.34 to $8.73 a bushel, in Manitoba from $8.57 to $8.84 and in Alberta from $8.66 to $8.73.
In early January, new-crop canola bids in Saskatchewan were $9.05 to $9.26, in Manitoba from $9.17 to $9.30 and in Alberta from $9.26 to $9.30.