With most commodities seeing a big jump in Thursday’s market, some analysts — including Brian Voth, president of IntelliFarm Inc. — are calling canola “the designated driver of the commodity party.” While the rest of the grain market saw decent gains, canola inched higher in comparison. Canola closed up $0.70 in November closing at $473.
Voth joined host Shaun Haney on RealAg Radio on Thursday and said, “canola has an uphill battle with trade issues and the fundamental situation. We are going to be going into the 2019 crop year with significant canola on hand.”
Similar to soybeans, there is concern over trade issues with China and the limits that it may put on exports. Much of the agronomic focus for canola has been the dry conditions in the southern parts of the prairies.
Originally, analysts were speculating a roughly 10 per cent drop in acres compared to 2018, but according to Voth, “it’s conceivable that number might be down 10, 12, 15 per cent from last year.”
Similar to soybeans, prices may have a chance at a strong recovery based on fewer acres and lower yields, but that also has consequences for farmer profitability.
All is not lost for canola, but it will take changes like, “if [China] trade picks up again, maybe we’ll hit normal situation by end 2019.” Otherwise, we may be looking at a one to two year issue, says Voth.
According to Carlo Dade of the Canada West Foundation, “it may take Canada re-looking the way it deals with China in the long term before trade is restored.”
Hear the conversation with Brian Voth and Shaun Haney below.