A huge canola crop and collapsing markets for commodities and stocks are driving many to throw in the towel on hopes for better canola prices.
But one brave farm marketing adviser is getting bullish again, and has begun moving back into canola.
“Canola has been trashed enough,” said Errol Anderson of Pro Market Communications.
“The horse is already out of the corral on the downside.”
Anderson has begun buying canola calls, hoping to find March $450 per tonne canola calls for about $15 to $20 premiums for his clients.
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“For a grower that’s already prepriced, that’s a dandy tool to put in the back pocket to catch the bounce,” said Anderson.
The ever-increasing size of the prairie canola crop, which some think could reach 12 million tonnes, up from Statistics Canada’s current forecast of 10.87 million. That has farmers worried about not just how to market it, but also how to store it all.
The surprisingly huge crop is the product of near-perfect conditions following lowered expectations, said Chris Anderson, vice-president for production at the Canola Council of Canada.
“Very tough spring conditions really reduced people’s expectations early in the season,” said Anderson, citing frost, poor emergence and late seeding in some areas.
Later conditions were optimal.
“Areas that needed moisture got moisture and cool conditions helped the crop to compensate and resulted in pretty good yields.”
Many are still getting used to how tough a crop canola is becoming, after long being known as a delicate plant.
“The ability of the crop to compensate is amazing,” said Anderson.
The huge crop adds stresses for marketers trying to sell it and move it out of Western Canada. Meanwhile soybean prices have been plummeting, pulling canola prices along.
But Errol Anderson thinks there is a lot of demand out there still, and while it has been spooked by the present market crisis, it will return over the winter.
“In this kind of market there will be opportunities,” he said.
