Canola costs referred to as ‘tempting’

MarketsFarm analyst Mike Jubinville thinks new crop canola costs within the vary of $18 to $19 per bushel are fairly darn engaging.

“How could you not be tempted to do something?” he requested delegates attending a latest webinar.

“I mean, those are fantastic prices.”

He acknowledged that some farmers in dry areas of the Prairies could also be gun shy about signing contracts after listening to a few of this yr’s horror tales of farmers who have been unable to fulfill their contracts and had to purchase their means out.

However, primarily based on pure economics he would undoubtedly be fascinated about signing a contract at at this time’s values contemplating there may be prone to be extra soybean acres going within the floor within the United States, the prospect of a report South American crop and sure extra canola acres in Canada subsequent spring.

Jubinville was requested if $25 or $30 per bu. is feasible for outdated crop canola.

“In this kind of crazy pricing environment everything is possible at the moment,” he stated.

But canola would wish a number of assist from crude oil costs in addition to the soybean market and he doesn’t see that occuring.

Fellow MarketsFarm analyst Bruce Burnett chimed in, saying the important thing to outdated crop canola costs would be the European rapeseed crop, which is within the floor now. If climate situations in that area flip unfavourable, something can occur.

“That is the one thing that could push this canola market higher quickly,” he stated.

Jubinville stated Canadian crushers are going to make use of the overwhelming majority of this yr’s canola manufacturing, shopping for an estimated 9.5 million tonnes, down barely from the ten.4 million tonnes crushed in 2020-21.

That will depart about 4 to 4.5 million tonnes for export, which is a fraction of final yr’s 10.5 million tonne program.

He believes two million tonnes have already been shipped and one other a million tonnes is in place, so there can be scant export volumes within the second half of the advertising and marketing yr.

Jubinville is forecasting a “bare minimum” 650,000 tonnes of carryout, so it’s undoubtedly not a bearish market however he can’t assist shaking the sensation that $23 money canola costs can’t final.

Australia harvested 5 million tonnes of canola and that may create intervals of “demand holes” for Canadian product.

MarketsFarm is advising growers to be 50 p.c priced on canola and to make incremental gross sales into rising markets.

“We are certainly watching for our next sales trigger and that may come sooner than we think,” he stated.

Barley is one other crop that he recommends aggressively promoting early. The market remains to be holding up properly however he thinks it has plateaued with feed barley costs in extra of $9 per bu. in Alberta and $8 to $9 in Saskatchewan.

That is as a result of “copious amounts” of U.S. corn are already beginning to circulate throughout the border. He is forecasting a report three million tonnes of imports, up from 750,000 tonnes final yr.

He believes feed barley values will finally gravitate towards the landed worth of U.S. corn in southern Alberta, which is about $30 per tonne cheaper than barley.

The oat market is “tight beyond belief.” Jubinville is forecasting 325,000 tonnes of carryout, which is as little as it could actually go.

Processors are “digging deep” in an effort to provide their mills. There are reviews of oats from the Peace River area of Alberta being trucked to Saskatchewan.

There are not any indicators of the market turning bearish anytime quickly and Prairie money costs of $10 per bu. are doubtless “here to stay,” he stated.

Peas have priced themselves out of China’s feed market at $17 to $18 per bu. He is forecasting a 1.25 million tonne export program to that market, down from 2.75 million tonnes final yr. China nonetheless wants peas for its fractionation and noodle markets.

Much of the remaining export enterprise can be to the U.S. meals and pet meals markets, though there was a little bit of a pause in that supply of demand of late.

Red lentil costs have fallen from their highs of fifty cents per pound a few months in the past however are nonetheless fetching 44 t0 45 cents for January by means of March supply.

The market is in a “corrective/lethargic phase” as a result of 800,000 tonnes of Australian product hitting the market at costs that work out to 40 to 42 cents at a midpoint in Saskatchewan.

The huge dangers within the pink lentil market are India’s intrusive import insurance policies and tough container logistics. That doesn’t make the market bearish but it surely minimizes the bullish sentiment.

Green lentils are additionally barely off their highs of 65 cents per lb., though latest sporadic demand has pushed costs again to 63 or 64 cents for No. 1 product.

Core customers want extra product, so the demand is there. However, Indian pigeon pea costs are cheaper than Canadian inexperienced lentils, which limits the upside.

Jubinville warned that each pink and inexperienced lentils are nearing the top of the normal two-year cyclical run-up in costs.

from https://vegetablesnow.com/canola-costs-referred-to-as-tempting/

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