Canola prices?

[phepworth]

Does anyone have any good news on the present disasterous canola prices for the coming year, surely things can only get better? Or can they?

[charliep]

Short run you had better get ready for the worst. World vegoil/US beanoil prices continue to sink lower reflecting the increased supplies/sluggish world demand. This is particularly the case over the next 3 to 4 months. Unless canola gets help from outside markets, prices have a good chance of heading lower into the fall given a lack of farmer forward pricing and the fact that canola remains the fuel that pays the bills in the fall. I am concerned about basis levels/impact on futures if farmers are forced to dump off the combine to meet cashflow commitments. Using a $15/t basis, I suspect that canola prices will remain in the $5.75 to $6.75/bu with a good possibility of $5.50/bu in the next 3 months and something closer to $7/bu this winter/spring.

[charliep]

With these realities in mind for the remainder of 1999, I think there is reason for optimism looking into 2000. The first is canola's good demand base. Canada has has markets for 6.5 to 7 MMT of canola every year. Canada has crush capacity of over 4 MMT with a strong likelyhood we will be in the 3 to 3.5 MMT range. Crush margins are likely to be ugly again in 99/00 but the industry has done a good job of developing markets/has commitment to maintaining them. On the export side, Chinese demand is not likely to be as large as in 98/99 and competition stiffer from Australia, EU and the US but I think that the quality of our crop means we have lots of opportunities to develope new markets as long as prices are competitive with other oilseeds. A final factor that keeps me optistic is improving economic conditions in S.E. Asia. The economic slowdown in this region has meant consumers have had to cut back on items that are more of a luxury. Vegoil is one area where they are spending less. Improving economic conditions should see a kick up in demand. This doesn't help in the short term but longer term offers a good reason for optismism.

[melvill]

Pro Farmer Canada is reporting that last week China bought roughly 150,000t of European ****seed for mid-summer shipment at prices of about US$220/t cif. (US $220/t cif is about Cdn $280/t instore West Coast.) For Canada to have a chance at that sale, Sept canola futures would have to be about $220/t, about $40/t below where it is now. According to Pro Farmer, this will be the BEST price anyone can expect the Chinese to pay for Oct/Nov type shipment, too. In store Vancouver cash canola for October/November position will probably move at about $25/t over, making Chinese sales workable at about a $255/t, Nov futures equivalent, which is $10 below where it is this morning.

[BreadWinner]

Its pretty need reading some old threads, It seems like $9.00 canola was tough try $5.75