By Alice McFarlane

Analyst sceptical about a return to $20/bushel canola prices

Apr 14, 2023 | 1:27 PM

The sharp drop in canola prices caught more than a few people off guard last month.

But farmers hoping for a return to canola prices in the high teens will likely be disappointed, according to Mike Jubinville, the senior market analyst with MarketsFarm.

Speaking to farmers during a recent webinar, Jubinville described the price drop of canola as the March Massacre.

“Canola dropped about $100 a tonne in a very short period of time on the futures. To us, those losses seemed well over done, and we are seeing elements of a corrective rebound in the process,” Jubinville said. “Still, these macro economic worries that linger create a bit of a wet blanket on rally potential not just on canola, but I think for all commodities.”

Jubinville was asked if he thought there was a chance for old crop canola to return to $20 a bushel.

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“Honestly, I don’t think so. We’d love to see it but it’s going to require something of significance and especially a real rebound in terms of vegetable oil markets worldwide, which have been under some pressure,” he said.

Jubinville said there would have to be some sort of threat on the vegetable oil market to reenergize canola prices. He also said the European rapeseed market has also been trending lower along with excess supplies of Australian product.

He said without some reintroduction of a new bullish catalyst, $20 per bushel seems high.

“I don’t know, maybe the wildcard of an inflamed Black Sea region and the war could inspire that re-emergence of risk premium in all marketplaces,” he said. “But it’s just too impossible to predict that at this stage.

Jubinville said the good news is the positive reports of canola crushing.

“The domestic crush side of things is going to be going gang busters throughout the rest of the market. It’s the export side that I wonder sometimes how we’re going to be able to compete aggressively into the Chinese market, but we’re losing ground. We’re seeing cheaper product from Australia and elsewhere,” he said.

Producers participating in the webinar were asked if rising production costs were going to change their canola seeding intentions.

The majority of producers, 60 per cent, said they will seed their intended area, while 31 per cent indicated input costs would lower their canola area and nine per cent were planning to seed even more canola.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW