Western Canadian canola cash bids continue to remain strong, with solid demand and concerns about South American weather providing support.
However, one analyst says, the advances seen in canola cash values may have reached their top levels.
Currently, cash prices for canola range from $11.75 to $12 a bushel for old-crop, while new-crop bids generally range from $10.60 to $10.80 a bushel, said Mike Jubinville of Pro Farmer Canada in Winnipeg.
Some of the firmness in the canola cash market comes from the continuing weather concerns from South America. The weather problems have amplified the chances of a reduced South American soybean crop, Jubinville said.
Read Also
Research focuses on drought tolerant alfalfa
Exotic alfalfa varieties that produce white, blue, cream and yellow flowers are being looked at by plant breeders to improve the crop’s drought tolerance.
The upward trend in soybean values has spilled over into the canola cash market, boosting prices, he said.
Strong demand from domestic crushers, and export demand, is also adding toward the bullish sentiment seen with canola cash values, he said.
Southern Manitoba is offering some of the top cash basis opportunities, Jubinville said. Strong U.S. demand, outstripping U.S. supply, thanks to a very small U.S. crop has helped strengthen the cash basis opportunities in southern Manitoba, he said.
While canola cash bids remain strong, they could be reaching their point of resistance.
"Canola can only go so far before you start to get users starting to switch to alternative products because canola is getting too expensive (compared) to soy, palm or otherwise," Jubinville said.
However, despite canola cash values at very high levels, if palm and soy continue to advance, that will continue to move canola cash bids up also, Jubinville said.
Nonetheless, any further upward movement in canola bids would be limited if oilseeds prices fluctuate, he said.
While canola bids remain strong, some factors may temper the firmness in cash bids, he said.
The continuing euro-zone debt crisis, along with a lack of fresh export demand from China, as the two-week new year’s holiday is underway, could undermine prices, Jubinville said.
