This year’s bumper canola crop has some analysts mentioning a disturbing possibility: today’s low prices might become more common in the future.
Ag Commodity Research canola analyst Nolita Clyde and Wild Oats Grain Market Advisory analyst John Duvenaud both said the productive capacity from new varieties and management may push canola prices to a new lower range of value.
“Maybe that’s the price of canola now,” said Duvenaud.
With many growers in Saskatchewan and Alberta getting 50 bushels per acre, $5 per bu. prices might be profitable.
“The same thing happened to lentils. It went from a 25 cent (per pound) crop to 10 to 15 cents in the last five years,” said Duvenaud. “If the production is there, it can happen.”
The canola industry has worked to increase production to develop the crop’s domestic and international share of the vegetable oil market.
But drought and frost years in the first half of the decade disguised the potential of high-yielding canola varieties that have been widely adopted.
Clyde said low prices demonstrate the need for new markets. Present markets can’t absorb a 10-million-tonne crop.
