New-crop canola cash values advance

New-crop Prairie canola bids continue their bullish trend seen since the start of 2012. However, talk of overbought positions in the futures, and the looming idea of large seeded canola area across Western Canada this spring, may cap further gains.

Mike Jubinville, an analyst with ProFarmer Canada in Winnipeg, said some of the underlying support seen in new-crop canola bids is tied to firm demand in the spot canola market. That has spilled over into new-crop canola values.

The record pace seen by domestic crushers, along with the firm export market, has chewed away at nearby supply, he said.

Meanwhile, the upward trend in the CBOT (Chicago Board of Trade) soybean complex has provided some underlying support to new-crop canola prices, Jubinville said.

Continuing concerns over the South American soybean crop have moved CBOT soybean values upward in the past few months. The CBOT May soybean contract on Monday was going for US$14.31 per bushel, up almost US$2.37 per bushel since the start of 2012.

New-crop canola bids in Western Canada are currently going for as high as C$12.75 in Saskatchewan, C$12.82 in Manitoba, and C$12.95 in Alberta, according to Prairie Ag Hotwire data. That is up anywhere from 90 to 99 cents per bushel from one month ago, and up $1.46-$1.62 since the start of 2012.

Prairie cash bids for old-crop canola also continue to move upward. Explosive speculative buying in the oilseed futures market by the large hedge funds and strong commercial demand has helped move canola cash prices upward, Jubinville said.

Spot bids for western Canadian canola are as high as C$14.45 in Saskatchewan, C$14.51 in Manitoba, and C$14.32 in Alberta, according to Prairie Ag Hotwire data. That is up from C88 cents to C$1.17 per bushel, compared to one month prior.

Despite canola’s continuing surge in prices, further advances may be limited for canola new-crop bids. Jubinville said ideas that futures positions are overbought and due for a downward correction could undermine canola values.

Farmers getting out in the fields and seeding an anticipated record area to the crop, along with beneficial weather, could cause major players such as China to pull back on purchases, he said.

Farmers will plant 20-23 million acres of canola across Western Canada this spring, according to some trade estimates. The first survey data from Statistics Canada will be released on April 24.

The pull-back of speculative purchases in the futures by a variety of market participants would also weigh on spot bids, Jubinville said.

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