Canola prices smash another record

Canola prices smash another record

Cropping
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International canola prices have once again smashed records for near contract futures values, leading to Aussie prices over $600/t.

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PROMISING START: Croppers will be looking at increasing canola hectares this year with record prices on offer at present.

PROMISING START: Croppers will be looking at increasing canola hectares this year with record prices on offer at present.

SPURRED on by a Canadian export program draining reserves, canola prices continue to climb.

As of Tuesday, benchmark Canadian Winnipeg March canola futures were trading at $A720 a tonne.

When prices pushed up to these levels two weeks ago, commentary suggested it was the result of a 'short squeeze' where a buyer needed product immediately and would run the price up for a short time, however the rally has been sustained.

Locally, this translated to a price of around $630/t port this week, meaning many growers upcountry will see site prices in excess of $600/t, which is a decile 10 price.

Nick Goddard, Australian Oilseeds Federation (AOF) executive officer, said Australian growers had a great year production wise, but added most of the canola was already committed.

"The prices at harvest were very attractive in historical terms and a lot of people took cash off the header," Mr Goddard said.

"There will be still some people with some canola stored but for many the advantage of the high prices currently on offer may be in terms of being able to hedge next year's crop rather than the old crop."

He said he expected canola plantings to rise if there was a normal break for the winter cropping season in autumn.

"There are plenty of areas with good stored moisture from summer rain and the price is attractive now, when farmers are coming up with crop plans, so unless the autumn break is late I would expect a solid plant of canola this year," he said.

There is some divergence in the levels of stocks held by Canada, the world's largest canola producer, with reports that the trade has estimates less than half the official Stats Can carryout of 1.2 million tonnes.

Support is also coming from the broader oilseeds complex.

Commonwealth Bank commodity analyst Tobin Gorey said lifts in soybean futures were flowing across into the canola sector.

"The tightness in the prompt Canadian canola market is combining with demand for soybeans to drive the rally," Mr Gorey said.

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