(Resource News International) –– Canola cash bids in Western Canada have climbed higher in sympathy with the rallying futures over the past week, although basis levels have widened slightly.
“For the most part, cash prices seem to be following canola futures higher,” said Toby Torkelson, general manager of RayGlen Commodities in Saskatoon, although he noted that basis levels have widened in some cases.
In the latest Prairie Ag Hotwire data, cash bids have improved by more than a dollar per bushel across most of Western Canada over the past month.
Top end bids for both old and new crop are topping $9.50 per bushel and nearing the psychological $10 level in many areas. There was some talk among producers that prices could climb as high as $12 per bushel.
“I think growers are quite often looking at their own backyard to make their marketing decisions,” said Torkelson, noting that “they’re seeing a lot of rain falling.”
With expectations for a large reduction in canola acres, particularly in eastern Saskatchewan, “growers are starting to get pretty bullish, and they have good reason to be,” he added.
While the lost acres in Saskatchewan and excessive moisture elsewhere should keep cash bids well supported, Torkelson questioned how much more room to the upside there could be.
“There are certainly reasons for prices to increase, but where they go from here is anybody’s guess,” said Torkelson.
In any case, he expected to see extremely aggressive basis levels heading through the winter months.
Market advisor Reid Fenton of the BLB Grain Group at Three Hills, Alta., said basis levels were already fluctuating widely from company to company and on a day to day basis.
While some farmers may be holding out for higher prices still, he cautioned that the futures were nearing some long-term upward resistance and the prices may not need to move much higher to ration the demand.
“We’re trying to encourage producers to scale-up sell into the market,” said Fenton.