The ongoing canola trade issue with China is costing Western Canadian farmers a lot of money.
“My personal feeling is canola today under the same fundamental cirumstances—if we had fluid trade with China and never had this issue—canola would be a good dollar a bushel higher than it is today,” said Mike Jubinville, director of market and weather with MarketFarm. “In my opinion right now, canola is on sale.”
Jubinville told the Farm Forum Event in Saskatoon that there is underlying support to the marketplace. Palm oil is at a two year high and world vegetable oil stocks-to-use ratio is declining and will probably be at the lowest levels since the 1970’s.
Canola oil is marketed as a healthy oil and sells at a premium to soybean oil, but Jubinville say it is not overvalued right now.
“Typically the trade as a median carries, as a rule of thumb, about a $50 dollar a tonne premium relative to soybeans.” he said. “In this case, we are probably trading around a $25 to $30 a tonne premium at this point in time.”
Spring wheat is also having market challenges following a price bump in September and early October. Since then, there has been a substantial drop in the Minneapolis wheat futures contract. Jubinville says buyers were more aggressive in September when they were worried about quality issues, but that changed later in the fall when wheat quality was not bad as originally feared.
“We’ve had a relaxation of the markets so we went up maybe a little too high, too fast in that six week period and now we’re going into a bit of a hangover,” Jubinville said.
He expects the wheat market to improve in early 2020 as Russian and European wheat prices trend higher.
“I don’t want to be overly bullish about this. There is no shortage of wheat out there. However, over the next two or three months, I can envision an opportunity that sees maybe another 50 cents a bushel added to this market place. It’s going to be one of those things where we are going to be looking a bump in the market that comes in a three to six week period and that’s probably going to be our next selling opportunity. Hopefully, a lot better than we are looking at today.”
Jubinville was one of 50 speakers at the three day Farm Farm Event, which wrapped up Thursday afternoon.
(photo: courtesy Farm Forum Event/Twitter)
