Hot canola forcing farmers to sell

Heating problems in storage are forcing farmers’ hands, adding to an already strong flow of canola to elevators

Canola has roared fast and furious into the western Canadian grain elevator system since harvest, but some of it has been flowing out of fear.

Analysts say farmers are selling canola when they are surprised to discover they have canola heating in the bin.

“It’s really catching guys off guard,” said Brian Voth, an Agri Trend marketing adviser in Altona, Man.

“It didn’t go in wet.”

But many analysts and marketers note cases in which farmers need to move canola fast once they discover it has begun heating.

That doesn’t surprise Dale Leftwich, the chair of the Saskatchewan Canola Development Commission.

This year’s harvest was far from ideal.

“It was an unusual fall for many producers. They were harvesting much later than they usually would,” said Leftwich.

Many farmers had to hold off combining until very late, hoping that crops would fully mature, but in the end, many had to harvest the crop while much was still green and some even with flowering patches.

That was a product of late seeding and re-seeding that followed growing problems in spring and early summer.

“The canola that was re-seeded stayed a lot greener for a lot longer,” said Leftwich. “It didn’t go into the bins in the kind of shape that it usually would have.”

Voth said the fear-driven deliveries of green and heating canola have added to an already strong flow of canola into the elevator system.

Canadian Grain Commission statistics show about 6.45 million tonnes of canola had been delivered into the elevator system by Dec. 6, compared to 5.9 million tonnes one year ago, 5.5 million tonnes the year before that and 5.6 million in 2012 at this time.

Voth and other advisers encouraged many farmers to lock-in prices for 2015-16 crops last spring and early summer, during a rally, so once the crop came in, many farmers began working to deliver those contracted crops.

For whatever remains, Voth encourages farmers to lock in deferred prices to capture the carry in the market .

John Duvenaud, the publisher of the Wild Oats newsletter, was also part of the drive to get canola priced and delivered early.

“We’re 80 percent priced on canola, which is pretty aggressive for this time of year,” said Duvenaud.

He isn’t bearish on canola, but also sees little reason for canola prices to rise. U.S. farmers are holding a lot of soybeans that they will soon need to move, and South American harvest and exports loom.

“I suspect once the new year comes, the flood gates are going to open,” said Duvenaud.

However, canola usage is good so buying demand should continue.

“The canola fundamentals themselves are not too dramatic either way,” said Duvenaud.

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