Farmers have experienced a powerful price rally in prairie crops and hope to see continued strength.But analysts say weather will continue to dominate the market and it is unclear if the Canadian situation has sparked a sustainable North America-wide rally.“They’re going to stay strong, but it doesn’t mean it is going to go higher,” said Ken Ball, a broker with Union Securities, about the rallies in canola and oats.Since the beginning of June, when the impact of rain began to be realized by the markets, old crop oat prices have risen by about 35 percent, new crop oats have jumped about 25 percent, canola prices have increased by about 12 percent and hard red spring wheat prices have moved up by more than 10 percent.They are all crops heavily influenced by prairie conditions, where the bulk of them grow. But mainstay American crops have rallied recently, with corn up almost seven percent and soybeans up five percent.American analysts are split on whether the Canadian situation caused the rally in corn and soybeans, the crops that lay the basis for almost all other North American crops, including cereal grains and canola.“We are turning non-believers into believers,” said Joe Victor of Allendale, Inc., attributing a significant portion of the rise in soybean futures to canola’s problems.“Canola and soybeans, there still is a connection there.”Mike Krueger of the Money Farm said he thinks little of the rise in soybeans is attributable to prairie weather woes, but instead is almost entirely due to wet weather delaying soybean seeding and damaging young crops in the Midwest.“I don’t think it was the main factor,” said Krueger.But John Sarnow of DTN said he thinks canola helped firm soybeans so that it could react to its own problems more strongly.“Your situation played a role in bringing some support in (for soybeans), even more so in the wheat,” said Sarnow.Many analysts argued during the winter that prices were forming lows and should rise in rallies once the new base was formed. New lows in most crops were reached in early June, after an abortive spring rally, seemingly confounding those expectations, but then the cross-crop rally ignited following the Canadian rain problems.A sustainable North American crop price rally would strengthen all prairie crop prices and even allow greater upside potential for crops such as canola. Analysts say canola can independently rise only a certain amount before it is reined in by soybean prices, so a soybean price rally is needed to give the short prairie canola crop the full upside potential farmers hope for.Oat growers might be in the best position. Many of them have bins full and processors can’t switch to cheap alternatives.“They are just going to have to go in and clear out the old crop oats,” said Ball about the processors.“There’s lots of oats in the bin on the Prairies – lots and lots and lots. But it may need higher prices to keep oats moving.”
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