The January canola contract hit a 13-year high, well above $500 per tonne last week, riding along with the rally in other oilseeds.
The record high for canola was set in 1984 at $724.
The nearby soybean contract in Chicago hit fresh 34-year highs.
The market was driven higher by rising crude oil prices, worries about dry weather in Argentina, disruptions in palm oil production after flooding Christmas week in Malaysia and strong vegetable oil demand in China.
Crude rose on tight supplies in the U.S. and worries about unrest in Pakistan and the Middle East, pushing prices back into the high $90s.
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Influential oilseed analyst Oil World cut its forecast for Argentine soy production to 48.2 million tonnes in mid December, up only 200,000 tonnes over last year despite a seven percent increase in seeded acreage.
Argentina is the world’s third largest soybean exporter.
The critical period for Argentine soybean development begins in about four weeks, but the weather there is being affected by the La Nina pattern, the cooling of equatorial Pacific water, which tends to deliver dry conditions to Argentina.
If the weather does turn against Argentina’s crop in the critical development period, it would spark further oilseed price increases.
China’s vegoil demand is growing at an exceptional pace. In the first 11 months of the year, it imported almost 30 percent more vegoil than last year at the same time.
Oilseeds are also benefiting from increasing livestock herds that consume oilseed meal. The U.S. hog herd is up four percent over last year at this time and the number of chicks on feed is up about four percent. In China, the government is worried about the rising cost of pork and is providing incentives to producers to increase herds that were hurt by disease the last two years. The Chinese government hopes to increase sow numbers by nine percent and the hog herd by 6.5 percent.
All this sets up what could be an interesting winter and spring for farmers as world markets bid for their acres.
Already some analysts say oilseed prices have risen to the point that they will steal acres away from spring wheat.
Futures prices for new-crop wheat dropped the last week of December on improving moisture conditions in the U.S. winter wheat belt and on word from Argentina that frost might not have caused as much damage to the wheat crop as thought.
But supporting the market was news that Russia was increasing its taxes on wheat exports and that China was considering doing the same. Both countries face high food inflation and want to keep grain at home to curb prices.
News from India about its wheat crops is confusing. The acreage sown so far is behind last year’s pace, but the government projects production topping 75 million tonnes, up slightly from last year. The early seeding period suffered from dry conditions, but government spokespersons say recent weather has improved and higher production in key wheat growing states will make up for reduced crops in less important wheat states.
