All Regions / How high do you think canola prices can go?

 

The contract highs at ~$770/T for May & July futures and $750-770/T for November futures are the current high-end targets on this rally. If we see some spring crop issues in the US or Canada, or if oil challenges the all-time highs, that would help push the upside further. But we are waiting for a clearer picture of the trend before reaching past the contract highs. We are also doing some research & comparisons to previous rallies like this to see if there are any more clues. There will be some info coming on that soon!

 

SK-10 / I have 9 load of canola left to sell. Should I move them or what's the plan?

 

If it were my canola, I would sell at least 3 loads now, and you can sit on the rest until you get the next sell signal from us. We still have 20% of the 2025 crop to recommend sales on.

 

All Regions / Is this rally a flash in the pan, and was that a blow-off top on Monday for canola and wheat?

 

We have to remember that the market spent the last 6 months working through a supply burden with patchy demand all winter, but that outlook is improving. Seed exports are firming up again while crush demand remains very strong. Biofuel policy is looking bright for the future as well. Early drought concerns & tighter global supply are helping wheat markets out lately. On top of this, we have the US/Iran war and parabolic oil market causing major volatility.

 

The charts had V-top signals on Monday, and some gaps were filled in the wrong direction. But that doesn't mean this is a 'flash in the pan' situation. If oil falls off, I see canola & wheat futures remaining in a higher range than we had a few months ago ($650/T+ canola and $6/bu+ wheat supports). Much of the work for this rally happened before the US/Iran war started, and recent events are adding a nice bonus.

 

Any upside from here can be considered a 'flash in the pan' unless there are some crop concerns this spring around the world. I say that because the only reason canola should climb past the contract high is because of oil rallying, or if markets are getting worried that the latest resurgence in demand won't be met if there are supply issues down the road. The same can be said about wheat prices climbing past $7/bu futures.

 

AB-19 / Our local canola basis has widened out to around -$30/T. Do you think we should be locking this in for July futures?

 

Yes, I anticipate the basis will continue to widen as people sell this rally & plan their movement for after spring. Canada has a large production to move out yet, and, in combination with futures rallying, this should result in basis weakening. We are in a unique situation where markets are rallying in a heavy bushel year. Fuel & freight costs are another reason grain companies will use to widen the basis. I would likely take the basis, lock a portion of the futures now, and leave a portion open for the next sell signal. 

 

Side Note: This is the same situation for new crop harvest delivery. We will often see September-November delivery widen out as folks plan for harvest cash & space. If you want off the combine movement, it would be smart to lock the basis on it, price a portion of the futures at current levels, and wait to price the other portion on the next sell signal.

 

All Regions / I am thinking about booking some fall canola on futures first now that the basis has widened out so much in our area. Do you think the basis will improve once deliveries & war effects start to wind down through the summer?

 

I like the idea of taking futures first on new crop, but I am not sure I would be targeting harvest delivery with that strategy. I usually say to do futures first on January or March as there is often a higher chance for the Dec/Jan/Feb windows to narrow up (improve) the basis versus harvest windows. The demand to get grain moved off combine typically keeps basis flat or weaker. If futures decided to drop $100/T here in the next few weeks, the Sept/Oct might improve on that type of move. But I can't count on that happening right now.

 

All Regions / What would be the bullish signal to watch for on the November canola chart?

 

A good signal on November is a close above $730/T. That paves the way for a re-test of the contract high at $747/T. Anything higher than that is a bit more unpredictable, but you could extrapolate some trendlines to call $770/T if prices break above $747/T. Also, gaps higher would be an ultra-bullish sign.

 

AB-16 / My $8.25/bu target was picked up for April delivery on HRSW. Should I set another target for $8.25-8.50/bu?

 

It's nice to see some higher targets being picked up. That seems to be the best way to get a better price on wheat this year. They just keep widening basis as futures rise, showing a flat price on the board. But they will turn around and pick targets to fill delivery windows when no one is biting at the street price. For your next target, I would extend the reach a bit. If futures can hit top-end resistance, you would be looking at another .50/bu upside. Maybe an $8.75/bu target would get picked at that point. And you can always pivot and sell if we make any recommendations as sell signals show up.

 

MB-4 / Would you sell some new crop HRSW for $8/bu for Sept/Oct delivery?

 

Yes I would recommend a small sale of 10% to get started on wheat. As a general, we don't want to sell for less than $7.50/bu and want to have room to make bigger new crop sales if futures can rally another .50/bu or more here. Don't sell for less than $7.50/bu, $8/bu or better is okay for 10%, and any price in between, I would weigh your options for cash flow needs & harvest movement. I can help with comparables if you aren't sure the price is right for you!

 

SK-8 / I am 25% sold on HRSW and wondering what targets I should set for more sales?

 

$7.50/bu should be an easy short-term target to get some more movement, up to 40-50%, then I would aim for $8/bu on another percentage to capture any further swing due to market volatility. You will have some good risk/reward balance on those two targets! Keep in mind this question is being asked in NE SK where prices are typically lower than most unfortunately.

 

All Regions / Can you give me a little more perspective on why you sold some canola & wheat this week?

 

Both markets have been whipsawing back and forth, leaving dangerous-looking V-tops on the charts, and there is a massive amount of fund-traded profits to be cashed out as the uncertainty ticks higher. I didn't like being only 60% sold on wheat with so much uncertainty in the market. We waited forever to get a rally on the futures, and to risk letting it slide would be a bad call from a risk/reward perspective. And there is still some to sell if we get a lucky rally because the US/Iran war doesn't get resolved soon, or maybe there are some global crop issues this spring/summer.

 

On canola, I watched the market rally $100/T on S&D info/China, then the war kicked in another $30-60/T. It's hard not to reward on the way up when there is no certainty it will continue. We had been patiently waiting for prices to crawl out of the basement. It was only a couple of months ago that we were treading water with break-even prices. We may look back and wish there was 1 less recommendation made, but I'm not willing to put that additional risk into my strategy plan when everyone has various decisions to make along the way for cash, delivery plans, road bans, etc. For me, that's the best setup that has worked well for the last 12 years.

 

All Regions / What were the crude oil & fuel highs in 2008?

 

$147/bbl is the oil high from 2008, and $129/bbl was the next high that was set in 2022. The 2008 average price range for gas was $1.35-1.40/L and $1.40-1.50/L for diesel. The 2022 average for gas was $2.05-2.15/L $2.10-2.30/L for diesel. Even though crude was lower than in 2008, the 2022 prices were up because of higher taxes, refining shortage during COVID, early RUS/UKR war reactions, and the CAD was weaker. A rough calculation to convert 2008 price to 2022 dollars (to account for inflation) would be maybe like $1.90/L.

 

AB-17, 21 / The same question from two ends of Alberta gives a good perspective on price spreads. Feedlot alley is paying $6.30/bu for September feed barley while zone 21 (north) is paying $5.25/bu. Both customers are wondering if it's a good spot to make some sales?

 

Those are good starting points for both ranges, up to 15-20% sold for some off the combine movement. Feed prices are largely tied to corn & cattle right now. Export demand has been very strong as well, which is helping keep the price up. If we get into some crop concerns in the spring/summer, we may get an additional .50/bu upside. But I would be looking at starting some sales now in case Canada produces another big crop (hopefully the case)!

 

MB-3 / I've found a crusher in North Dakota that would be a good fit for our soybeans come fall time. Even with freight it's a better deal. However they said if tariffs come on, we would be on the hook for that. Do you have any indication that soy could be affected by USMCA. Is the reward worth the risk?

 

It seems to me that there is a very small chance we'll see any tariffs on soy through the USMCA negotiations. I can't see the US government allowing that to happen even if Trump is posting social threats during the negotiations. Biofuel demand is sky high in the US right now, and they need our canola & soy products, along with many other things (lumber, potash, etc.) I can't see the US applying a soybean tariff with the likelihood that retaliatory tariffs would make everything else more expensive for them. There are discussions leading up to July and more official announcements by summer and later for USMCA.

 

All Regions / Why isn't canola higher and correlating better with the historical soybean oil chart? Are inventories and forecasted carryover having that big of an effect? When is canola's future clear in the renewable fuel space?

 

US biofuel policy is pushing soyoil demand directly (using 50% of all US production) & soyoil is the preferred renewable diesel feedstock. Logistics, politics, trade friction (with US/China) hold canola back from that demand too. Plus, canola has a more bearish S&D right now than bean oil. Bean oil is 40% off the low while canola is only 22% off the low. For canola to catch up to bean oil it would have to hit $840/T.

 

The renewable future depends on clean fuel regulations, if 45Z credits strongly reward low-carbon oils and become relative to US incentives. Also, Canada's crush expansion. If they run at full capacity to meet what is hopefully an increasing demand for low-carbon energy. If all these things align, within 24 months, I can see the demand increasing by 8 million tonnes or more as the market shifts sentiment from just an export oilseed to an energy crop like soy oil. That would raise price floors for sure.

 

MB-4 / I have 20% of my oats left to sell. I can get $4/bu. Cash prices haven't moved much with this swing higher in futures. Do you think the price will go up yet?

 

The milling & export demand situation for oats hasn't improved, and the futures gain is largely a spillover effect from wheat & corn rallying. There was also a burdensome supply in 2025 that will keep upside limited for this crop year. It looks like maybe +.20-.30/bu at best until something changes with crops (corn in US/oats here) or export demand down the road. I would probably be considering the $4/bu to clean up your old crop.

 

AB-17 / I am wondering what your thoughts are on brown & yellow flax markets. I can get $15/bu and $20/bu for new crop right now. Should I start some sales?

 

I don't have much information on yellow flax, but I do think brown flax can rally at least $1/bu and maybe more. April is often a good time of year, with the seaway opening and more shipments. That is the window to watch for any increases in brown & yellow flax.

 

AB-16 / Just looking around and it seems pretty dry in the mustard producing areas. What are your thoughts on .42/lb for new crop yellow mustard?

 

I am recommending .42/lb as a starting point only if people are really geared up to get some cash flow & harvest movement on the books. 10% type thing. I still think yellow mustard has a chance to hit .45/lb or higher again on old & new crop, so am not in a big rush yet.