CNS Canada –– Canola futures burst through the psychologically-important $500 per tonne mark during the week ended Wednesday, but now face a critical juncture as weather and time will dictate how much of the remaining crop farmers can get off before winter.
“Harvest prospects don’t look that great right now as it doesn’t dry up that fast this time of year,” said Bill Craddock, a trader who farms near Winnipeg.
Both the November and January contracts gained nearly $30 on the week, taking support from surging prices for vegetable oil and solid gains in Chicago Board of Trade (CBOT) November soybeans.
Many traders moved out of the November contract too in favour of January, which resulted in heavy spread action during the week.
With estimates that up to 20 per cent of the Canadian canola crop still has to be taken off, the potential for higher prices is likely still out there.
However, Craddock said, there is still much to be decided.
“Probably at this stage there’s not a lot of loss to the crop. It’s what happens in the future, whether the weather gets to a point where the crop can get off,” he said.
With the move above $500, he pegs off-the-combine sales at $11 a bushel.
“(One outlet) was paying that yesterday, right on the edge of it,” he said, adding “I wouldn’t say, though, that $500 (per tonne) is our floor support; we could still have some down movement.”
— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.