What’s a reasonable price for canola this year?
That’s a question market analyst Greg Kostal pondered during a presentation to the Manitoba Canola Growers Association during Manitoba Ag Days yesterday.
His answer: about nine dollars per bushel, unless something radically changes the world supply and demand situation. Kostal said he thinks canola futures prices will bounce around in a range of about $8 to $12 per bushel this year, with $8 being too cheap and therefore creating demand, and $12 being too expensive and beginning to strangle demand.
With that outlook, he thinks farmers would be smart to sell into rallies that take canola to $10 or higher, and to hold on to canola when prices drop to $8. Farmers might not like the idea of nine dollar canola being this year’s median price, but the demand factors that produced last spring’s high prices have been minimized in the economic problems since then, so farmers shouldn’t assume they’re coming back.
Of course, if something big like a crop disaster in South America, as opposed to the present moderate problems, occurs, then canola prices could surge higher. But with the present situation, anything better than nine dollars has to be considered a decent price and anything substantially higher should be seriously considered, Kostal said.