The futures price for November 2011 works out to about $11 per bushel.
How often can farmers lock in a profitable price a year ahead of their next harvest?
With oilseed prices this high, if you can also lock in inputs like seed, herbicide and fertilizer, it would be advisable to at least get out the crop planning spreadsheet to work out some marketing scenarios and talk to your marketing adviser about pricing part of the 2011 crop.
We are not sure about how much canola will make it to the bin this year. The September Statistics Canada survey said farmers would harvest 15.55 million acres of canola and produce 10.43 million tonnes, but there were weather challenges after StatsCan did its survey. It is hard to say how many acres were harvested. And there is talk in the market that at least in some areas, yields were better than expected.
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So supply is still uncertain. Agriculture Canada last week provided its forecast of demand, putting exports at six million tonnes, down from 7.13 million last year.
The smaller number is due to the smaller crop and stiff competition from crushers.
Domesticusewasforecastat 5.8million tonnes, up from 4.96 million last year, due to the full year of operation of the two new canolacrushingplantsat Yorkton, Sask.
Agriculture Canada put the carry-out at a one million tonnes, the smallest since 2003-04.
Indeed, Agriculture Canada forecast tight year-end stocks for all the major grains and oilseeds.
The market will likely need to encourage more canola acres in 2011 so there could be more than one opportunity to price some of the next crop at attractive levels.
And if La Nina, which is the cooling of ocean temperature in the eastern Pacific, follows its usual trend, it could create drought worries in South America’s soybean regions that would spark further price rallies.
La Nina is already blamed for causing too much rain in eastern Australia. Flooding in eastern states and drought in Western Australia caused the Australian Oilseeds Federation to cut its forecast by 8.2 percent or 185,000 tonnes, to 2.065 million tonnes. Last year, Australia produced 1.897 million tonnes of canola.
