Farmers were able to take advantage of the November canola contract's peak late last week through sales and locking in price protection options, according to David Derwin, a Portfolio Manager at Winnipeg-based Ventum Financial.
The new crop contract reached a peak of around $804 a tonne on Wednesday before sliding down to the $770 range. It closed Monday afternoon at $769, up $4.80 on the day, according to barchart.com.
"Did I see it happening? No, but what I do know is that when prices get to those levels, it's some good prudent revenue management," said Derwin, adding farmers have locked in prices of $15, $16, and in some cases $17 a bushel.
"We're seeing the producers react accordingly."
He notes the $770 range is the high end for new crop canola and has been trading there since May.
But Derwin noticed the trend for canola this year is the same as last year with prices hitting a seasonal high into June before trading lower through summer until harvest in the fall.
"So are we going to see that exact trend again this year? Not necessarily, but we get into May, we get into June, we get into early July and that typically does seem to be the seasonal high levels for Canola and a lot of the other crops like corn and soybeans as well," he explained, "But the bigger picture is that, you know, the seasonals are near some of their high levels and if we don't have any major weather concerns, it makes those seasonal high levels a little bit more important to keep in mind."
Derwin will be observing in the short-term how the weather and geopolitical events, such as biofuel policy in the U.S. and Canada, as well as the conflict in Iran, will affect canola prices.
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