(Resource News International) — With producers going all out in an effort to get the canola crop off the field, there has been plenty of activity in the cash market with no shortage of elevator deliveries.
Cash prices have gone steadily higher over the last month, and Mike Jubinville, an analyst with Pro Farmer Canada in Winnipeg, said the strength is primarily tied to the futures market.
“Strength from the CBOT (Chicago Board of Trade) soy complex, which has advanced over a dollar per bushel in the last three trading sessions, has supported canola,” Jubinville said.
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However, even with the strong price action in the futures market, the cash market has been lagging behind. Jubinville said this is because of the increased number of elevator deliveries.
“That’s been happening throughout the harvest period, and in the last couple weeks, harvest has picked up like gangbusters. We’ve seen a lot of producers who have been taking product straight to the elevator,” he said.
“When too much comes in too fast, you start to fill up the system, and the grain companies start to say ‘I want your canola, but I don’t want it all at once.’ Start to widen out the basis as a way to make the farmer think twice about delivering.”
The canola harvest is currently about 78 per cent complete across the Canadian Prairies. Normally it is around 95 per cent finished at this time of year.
Jubinville said there is definite potential for upside, with traders looking at canola — as well as other grains — as a speculative investment, as opposed to a physical commodity.
Speaking of upside, some market participants speculated prices could end up going as high as $14 per bushel.
Right now, Jubinville said, some bids are nearing $11 per bushel, which is very high, especially considering that there is a significant amount of product in the area.
Current elevator deliveries for canola were bringing as much as $10.78 per bushel in Manitoba, $10.75 per bushel in Saskatchewan, and $11.09 per bushel in Alberta, according to Prairie Ag Hotwire. Those prices range from 34 to 54 cents per bushel higher than one week ago.
