Some producers experienced a great deflating feeling last Friday when the ag commodity markets – including canola prices – shot through the roof, but their local elevator’s price didn’t budge. As suddenly as the futures markets moved up, basis levels weakened.
That’s what happens when the elevators don’t need to chase the crop. At harvest this is quite typical, but disappointing, nonetheless, to read about and hear about a big crop price rally that actually means nothing on the ground.
That’s why, for growers, the announcement that Bunge is doubling the capacity of its Altona oilseeds crushing plant is great news. Even with huge new crushers operating in Yorkton, there’s still generally so much crop out there that the crushers don’t need to chase it most of the time. Remember when that was the worry? That there wouldn’t be enough canola to go around? Just a year or two ago that’s what lots of folks thought. And they expected chronic underutilization of capacity in Yorkton.
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Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
Well, prairie farmers have shown they know how to grow canola. And the breeders and input suppliers have shown they know how to design high-yielding crops. And the crushers are showing they’re serious about crushing more and more year after year.
This announced expansion in Altona – where I’m heading in a few minutes in order to take photographs of the plant and to interview a young promoter of the Simmental cattle breed – helps keep that fine balance between overcapacity and undercapacity, and should help keep canola demand steady on the prairies. Bunge says it plans to expand its other plants across the prairies too.
That should mean stronger basis levels for farmers, and that’s the only thing that counts. At least to me.
By the way, my taking pictures of the Altona canola plant and my speaking to the Simmi promoter have nothing to do with each other. But in the crazy, madcap life of an agricultural journalist, that’s the kind of thing you get: a wild combination of disparate agricultural issues being covered on the same day. Yesterday I was wearing a white bodysuit and touring hog barns. This morning I was at the provincial legislature covering the Golden Carrot awards. It’s pretty hard to get bored in this job, but it’s pretty easy to lose focus.
Now what was I talking about? . . . .
