Canola prices at the elevator will likely float in the $6.65-$8 per
bushel range in 2002-03, says Alberta Agriculture market analyst
Charlie Pearson.
There’s a 10 percent chance it will sell for more than $8, and a five
percent chance it will sell for less than $6.65, he said during the
Grain World conference.
Those numbers include an $18 per tonne basis to simulate a typical
Saskatchewan return to farmers.
Pearson said canola acres planted this spring depend on two major
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signals, one for production and the other for markets.
Moisture levels will be crucial, because most farmers don’t like to
plant small-seeded canola into dry soil. If drought conditions persist
into spring, canola acreage will suffer.
But if there is good soil moisture, seeded canola acres could reach 12
million. Last year, there were 9.6 million canola acres, the smallest
since 1996-97.
Canola prices will also affect seeded acreage, Pearson said. If there
is a rally in vegetable oil prices and sufficient moisture for a crop,
acreage will also increase.
Pearson said the Prairies need to produce a 6.5 million tonne crop to
meet customer demand. That is equal to an 11 million acre crop at 26
bushels per acre, or a 12 million acre crop at 24.5 bushels per acre.
Pearson expects to see November 2002 canola futures trading at between
$310-$350 per tonne if weather conditions are average. On March 4 they
were trading at $326.50.
If conditions are dry, they could easily rise above $350. If there is
lots of rain during the growing season and adequate acres, it could
fall below $310.
