January 26, 2012

 

Western Canada's rapeseed cash value reach high levels

 

 

With solid demand and concerns on South American weather giving backup, Western Canadian rapeseed cash bids continue to remain firm.

 

However, one analyst says, the advances seen in rapeseed cash values may have reached their top levels.

 

Currently, cash prices for rapeseed range from US$11.75 to US$12 a bushel for old-crop, while new-crop bids generally range from US$10.60 to US$10.80 a bushel, said Mike Jubinville of Pro Farmer Canada in Winnipeg.

 

Some of the firmness in the rapeseed cash market comes from the continuing weather concerns from South America. The weather problems have amplified the chances of a reduced South American soy crop, Jubinville said.

 

The upward trend in soy values has spilled over into the rapeseed cash market, boosting prices, he said.

 

Strong demand from domestic crushers, and export demand, is also adding toward the bullish sentiment seen with rapeseed cash values, he said.

 

Southern Manitoba is offering some of the top cash basis opportunities, Jubinville said. Strong US demand, outstripping US supply, thanks to a very small US crop has helped strengthen the cash basis opportunities in southern Manitoba, he said.

While rapeseed cash bids remain strong, they could be reaching their point of resistance.

 

"Canola can only go so far before you start to get users starting to switch to alternative products because canola is getting too expensive (compared) to soy, palm or otherwise," Jubinville said.

 

However, despite rapeseed cash values at very high levels, if palm and soy continue to advance, that will continue to move rapeseed cash bids up also, Jubinville said. Nonetheless, any further upward movement in rapeseed bids would be limited if oilseeds prices fluctuate, he said.

 

While rapeseed bids remain strong, some factors may temper the firmness in cash bids, he said.

 

The continuing euro-zone debt crisis, along with a lack of fresh export demand from China, as the two-week new year's holiday is underway, could undermine prices, Jubinville said.