Canola prices not expected to hit recent highs: expert

Canola farmers who were hoping to see the price of the crop jump back up to previous levels might be a little disappointed according to an industry expert.

Michael Wilton, who is a market analyst with Mercantile Consulting Ventures and is also a farm advisor for Exceed Grain Marketing, said farmers who were holding onto crops from last year hoping to see prices back up to the $25 to $30 a bushel range might be out of luck this time around.

“As we head into harvest, prices generally go down. Farmers start harvesting, and there’s a lot more supply, and so elevators are often finding themselves decreasing their prices just because there’s a lot more grain available,” said Wilton.

He noted before the pandemic and the Russia-Ukraine war, canola was selling for around $11 a bushel.

Wilton said the high energy prices along with the pandemic helped play a role in setting the prices way above average.

“The biggest thing for canola was just the very, very poor crop that we had across western Canada last year. There was just significantly less production and because of that, prices were quite strong.”

He added that compared to last year, it appears the crops are doing quite well in the country, which is leading to lower prices.

Despite not seeing prices around the $30/bushel mark, Wilton said prices are still fairly decent sitting around $18.50 to $19 a bushel, with the chance for prices to rise a bit up to $20.

“I’d say I don’t know whether it will go much beyond that, but that’s kind of what I would be targeting if I had canola and had some time to wait.”

Tyler Bartmanovich is part of a grain farm just south of Winnipeg and said they aren’t holding out for prices to climb.

“We’re sort of happy sitting where we are, just where the crop is right now,” said Bartmanovich. “The crop went in pretty late, especially for farms along the Red River, us being one of those. Canola went in probably three to five weeks later…so there is a potential risk of frost in the fall, so you don’t want to be over committed on what you are confident producing.”

He noted that if the opportunity comes and the price of canola sees another spike they will take advantage of it, but they don’t plan to hold out for a jump.

Bartmanovich also pointed out that farmers have to have a little bit of perspective, pointing to the much lower prices that were considered normal before the pandemic.

“For the last, call it five years, excluding 2021, everyone would be happy to be selling their canola at $11 a bushel, right? That would have been a good price, say in 2019. So we have to keep in mind where we are right now,” he said. “The market is not in our hands, right? So, it is going to do what it’s going to do. I mean, yes, it would be lovely for it to get back to that $25 to $30 mark, but I mean, we’ll see what happens.”

He said he isn’t one to count his eggs before they hatch and said this year they are expecting an average crop, adding they’ve been fairly happy with the crop conditions considering the late seeding and the flooding in the spring.

For those who might still be looking to hold out a little longer to see if prices will change for the better, Wilton said there are other things farmers can do.

“If farmers are needing the space and/or the cash flow and have to sell some grain, I might actually either sell barley, maybe some peas, there are some other values out there. Because we think, overall, canola is probably a little undervalued at the moment, and if they can store it and wait until after these harvest lows, we’ll see better prices in a few months’ time,” said Wilton.