Cash canola prices are seen strengthening on the western prairies, with cash data from pdqinfo.ca reporting a range for four regions including northern and southern Alberta and northwest and southwest Saskatchewan from $449.19 per metric ton to $455.43/mt on Jan. 8 ($10.19/bushel to $10.33/bu), the highest price levels seen since late February.
Cash markets showed signs of strength in pdqinfo.ca's roll from the January to March future as of Jan. 1. While the Jan/March futures spread was shown at $10.60/mt at the time of the roll, the cash basis only weakened from $6/metric ton to $7/mt in the first days of January across the four regions viewed, averaging $6.35/mt.
As a result, canola prices are off to a good start for 2020. Between Dec. 31 and Jan. 8, the March contract has gained $2.60/mt, while cash prices reported for the four regions discussed gained from $7.91/mt to $9.50/mt over the period, with basis doing the heavy lifting.
As of Jan. 8, the basis reported for northern and southern Alberta was roughly $2/mt weaker than the three-year average for these areas, while for western Saskatchewan, ranges from roughly $4/mt to $5.50/mt weaker than the three-year average for this day.
Cash trade in Vancouver has also shown signs of strength this week, strengthening $5/mt to $20/mt over the March since Jan. 3, which bears watching.
Another signal that bears watching is the May/July futures spread. This has narrowed from minus $6.30/mt on Dec. 31 to minus $4.90/mt on Jan. 8. This may signal a neutral view of market fundamentals, while moving toward what may be viewed as a bullish view of fundamentals.
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