In the western Canadian market, there’s currently been a lot of focus on canola, and StatsCan confirmed as much in their latest satellite-based report.
Brennan Turner, CEO of FarmLead, says that when it comes to this StatsCan report, he would call himself a believer. Although there have been some yield numbers that Turner’s heard that vary a bit from what the StatsCan numbers are saying, he admits it’s a pretty safe forecast.
“At the end of the day, Statistics Canada tends to underestimate their crops in their early reports regardless of their survey estimates or database estimates. Arguably, I’d argue that their numbers were pretty good,” explains Turner. “On the flip side, provincial yield numbers from Alberta and Saskatchewan tend to underestimate the crop. So I think we are probably somewhere in the middle, and I think some of the premiums that you are seeing on the board today shouldn’t be ignored.”
Soybeans have seen a continuous rise, and canola has been following a similar pattern. But is that all it’s doing? Following? Turner thinks they definitely give the following sentiment, as soybeans do lead world oilseed pricing.
“We’re talking about strong exports continuing into the 2020/2021 cropping year, and there are some harvest threats as well. You’ve got frost that happened last week, and even this week in a few areas. So there’s a lot of things that are weighing in on the market, and that’s why we’ve seen the premiums pull up here,” Turner explains. “For most parts, $11/bu has been seen on every single bid sheet across western Canada at some point in the last ten days or so. We haven’t seen those values in so many years.”
Although this is a good news story for canola growers, Turner does have concerns when it comes to these unseasonal premiums.
“The premiums that we usually see, the ones that are rallying in the fall and winter months, might not be as robust as years past. With that in mind, i’m just cognizant of making sales and taking a profit when I can at these kinds of humps.”
With November futures at over $520, and some carry in the market, producers can be feeling like things may be heading back to a bit of normalcy — despite this being abnormal timing. As Turner notes, these are the kinds of opportunities you probably shouldn’t pass up.
“I can’t guarantee that these prices are going to stay at these levels. There are some arguments out there that we’ve kind of hit this new price equilibrium in terms of demand versus supply, and that we’ve kind of figured this out, so the higher prices are here to stay. But the downside risk is very real,” he notes.
Check out the full conversation with Brennan Turner, and RealAgriculture’s Shaun Haney, below: