CNS Canada –– Prairie farmers are seeing better prices than earlier this winter for their canola in the cash market, but values vary widely as some regions are seeing better basis levels for old crop than others.
“We’e seen areas and pockets where basis levels have improved where on-farm supplies are a little tighter,” said Jon Driedger, senior market analyst with FarmLink Marketing Solutions.
For example, supplies are a little tighter in southern Manitoba because there’s been better rail service to move the crop out of the region than some other parts of the Prairies.
“We have quite a bit of crush capacity in southern Manitoba, so there’s a lot of local demand as well,” Driedger added.
Farmers in southern Alberta have also had more opportunities to sell their canola, making supplies a bit tighter, as rail service has been good in the area.
But other regions, such as the Peace River area in Alberta and parts of Saskatchewan, haven’t been so lucky and have canola sitting around because rail service hasn’t been as good, causing lower cash prices.
The poorer rail service is “maybe a reflection of the pressure to get volume moved,” Driedger said. “It tends to give preference to the place where you can get quick turnaround either due to the ability to load lots of cars quickly, or geographic location.
“I think that’s left some places maybe sitting on the sidelines looking in.”
The average price for old-crop canola in Manitoba ranged from $9.75 to $10.45 per bushel in early June, higher than the $9.05 to $9.90/bu. in Alberta, Prairie Ag Hotwire data shows. Saskatchewan prices were around $8.80 to $10.10/bu.
New-crop values across the Prairies are lower, ranging from about $8.75 to $10/bu., as basis levels continue to be wide for bids in the delivery months around harvest time.
“Basis levels are a reflection of how difficult or easy it is for the market to get your hands on cash supplies,” said Driedger. “And harvest is always a window when you typically see a little bit wider basis level.”
There are some stronger pricing options in further-out delivery months, such as January or February, but new-crop values are under pressure overall because of the large carryover stocks expected from 2013-14.
Agriculture and Agri-Food Canada’s most recent supply and demand estimates call for 3.25 million tonnes of carryout stocks for 2013-14.
Where prices for canola in the Prairie cash market move, heading up to harvest, will all depend on weather conditions and how the crop looks.
“Growing conditions overall are pretty good up here, they’re pretty good in the U.S., they’re good in Europe and the Black Sea region,” Driedger said. “So I think that as long as that’s the case it will be hard to get a lot of upside traction.”
— Terryn Shiells writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.