CNS Canada — ICE Futures Canada canola contracts have seen some large price swings over the past two weeks, but the bids in the countryside remain relatively favourable overall, according to an analyst.
The May contract hit a nearby high of $530.50 per tonne on March 5 before dropping to a session low of $511.50 by Monday. The contract settled Wednesday at $518.40 per tonne.
The new November futures also bounced around within a wide range recently, settling Wednesday at $513.60 per tonne.
Cash bids that work out to around $11 per bushel for new-crop and a bit above that for old-crop “are not too bad,” according to commodities investment advisor David Derwin of PI Financial in Winnipeg.
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Current cash opportunities represent a good floor price, he said, and recommended producers do at least some hedging.
“You don’t want to get too aggressive, but pricing some new crop or letting go of some old crop is not a bad idea,” said Derwin.
From a chart standpoint, canola futures are at relatively high levels with upside targets around $525-$530 per tonne in the old-crop May and July contracts, said Derwin.
While any number of factors could sway where values go from here, Derwin recommended producers keep an eye on profitability and how the prices translate back to the farm.
“The world will change two or three times before the crop is off the field,” said Derwin, noting prices can be expected to see some fluctuations over the next few months.
Activity in the Canadian dollar should also be followed, with recent weakness in the currency supportive for prices in Western Canada.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.
