Ongoing concerns about short-term supply have seen canola values on both the major North American and European futures exchanges for the oilseed hit all-time records.

This week, France’s Matif futures contract hit $A816.75, a record high, smashing the $812.69 set in 2012.

It comes after the Winnipeg Intercontinental Exchange (ICE) contract in Canada pushed up to $A850 late in February, before easing slightly this month.

Official Stats Can (Statistics Canada) data released in February announced a whopping 42 per cent reduction in their estimate of Canadian endseason canola inventories, which contributed to the rapid rise in Canada.

In contrast, in spite of sitting right at the top of historical values, both Australian new and old crop cash bids are relatively depressed at around $A600/t for both.

However, Grain Producers Australia (GPA) chairman Andrew Weidemann said it was largely a nominal price as virtually all old crop had been sold and few farmers were interested at locking in prices for the upcoming crop.

“Everyone who grew canola sold it quickly this year because the prices have been so good.”

Nick Goddard, Australian Oilseeds Federation (AOF) said it was a mixture of fundamental and technical factors that had pushed prices up.

“There is a bit of uncertainty about production, but you also have technical factors with traders looking to cover short contracts and that supercharged the market for a while and we are starting to see that come off a little,” Mr Goddard said.

In China there have also been sharp rises, fuelled by concerns about access to Australian canola after reports of buyers washing out Australian purchases and the rejection of a shipment of Australian canola at a Chinese port due to blackleg contamination.

The world oilseed market more broadly is factoring in tight supplies with soybeans in short supply and concern about the Argentine soybean crop also weighing heavily on investors.

Soybean futures this week rallied to six year highs on the back of the shortage of vegetable oils in general, with issues with soybeans, canola and even palm oil.

The slow easing of COVID-19 restrictions is also driving increased demand for biofuel, creating an extra avenue for demand.

In canola specifically, the fall-out of falling EU production, due to regulatory requirements, such as the banning of neo-nicotinoid insecticides, means supplies are harder to get.

This is in spite of Australia producing its biggest crop since 2016-17.

Originally published on Farm Online 10th March 2020, written by Gregor Heard. Image sourced from Farm Online