Winnipeg canola futures spoke at $1000 a tonne, Australian prices rise

International canola futures prices have spiked, bringing upsides for Aussie growers. But there’s a lesson to heed, as well.

Canola futures prices on the Winnipeg commodity exchange topped $1000 a tonne for the first time last week, a good sign for Australian growers. Picture: Zoe Phillips

Canola futures prices on Canada’s international commodity exchange in Winnipeg last week hit $1000 a tonne in Australian dollars for the first time in the 2021-22 season.

The November 2021 price spiked at $C918 a tonne, or $1002 a tonne, before falling back to $C865 a tonne ($A945 a tonne) by the end of the week.

CBA agri commodities strategist Tobin Gorey said there was no special fundamental event which triggered the spike.

Mr Gorey said the price had been rising due to the low crop forecasts but the spike was probably caused by traders “chasing the price up”.

He said it later fell as quickly as it risen.

Canola prices in Australia also rose last week, but only to about the $A900 a tonne mark.

Thomas Elder Markets analyst Andrew Whitelaw said the Australian market usually traded at a premium to the Canadian market.

“But now we are at a discount,” Mr Whitelaw said.

“There is now a drought premium in Canada.”

It was the second time this year, Canadian canola futures prices topped $A1000 a tonne.

In July, the Winnipeg market’s August futures price spiked at that level as the market reacted to the drought which had hit northern US states of North and South Dakota and the grain belt of Canada further to the north.

It was the worst drought to hit Canada since 1988.

Mr Whitelaw said Australian growers should only lock in to high prices once they were assured of a crop.

“I wouldn’t be selling too early because you can still get a frost and find yourself short,” he said.

“As conditions get a bit more sure, farmers have been willing to sell and being quite rewarded.

“There is no reason why we would see huge falls in the canola price before harvest (in Australia).

“Even if it falls $100 a tonne, that’s still a fantastic price.”

Mr Whitelaw said Canada accounted for 60 per cent of the global trade in canola, with Australia second on about 15-17 per cent and the Ukraine on 15 per cent.

“With Canada out of the picture, buyers will go to that second source, and that will generally be Australia,” he said.

“If we are going to produce a big crop, with high prices, Australian farmers are going to have the best of both worlds.

“This year will be remembered for a long time.

“But it will be important for farmers to prepare themselves for the next drought in Australia.”

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