The price of canola has been steadily increasing since the beginning of the month, while wheat prices are trending a bit weaker.
Portfolio Manager at Ventum Financial in Winnipeg, David Derwin says the November canola futures contract was trading at a support level of $725 to $730 a tonne at the start of July. It peaked around $790 and it's been at the higher end since.
He says farming clients have been looking at pricing options to capitalize on the current trend, such as cash sales, futures to lock in a price, or put option strategies "where you can at least essentially ensure a minimum floor price on your canola up at these levels."
"So one way or another, yeah, there has been a little bit more activity there." Derwin added.
He figures the floor price for new crop canola would be in the range of $17 a bushel, depending on what prices are locally.
But he adds how long this strong price trend could last depends on the weather and external factors such as the ongoing U.S.-Israel-Iran conflict, and the price of crude oil.
"We've had some hot weather, but that is supposed to subside. Instead of being in the mid-30s, it might only be in the mid-20s in a lot of areas. There are some areas that got a lot of heat, but not necessarily the main growing areas," Derwin said of recent weather conditions.
He also noted crude oil prices had a rally around the same time as canola, going from approximately $68 up to $80 per barrel.
"So it certainly is having that impact; some of it is coincidental, but some of it is very much a correlation between the two, with crude oil driving it." he said of canola and oil prices.
The November canola contract closed Tuesday at $773.40, down $15.60 in day trading.
As for the September Minneapolis Wheat contract, he says it rose from the start of July from $6 a bushel to around $6.60, but no where near the peak of $7.50 in the middle of May.
Therefore, he says wheat has been doing okay but is on the lower end of the price range.
He adds North American prices are "a fair bit away" from European MATIF futures by comparison.
MATIF futures have been strong after a heatwave gripped parts of the EU, incluidng Germany and France.
The September milling wheat contract closed Tuesday at $216.50 a tonne, up $1.75 on the day.
The September Minneapolis Wheat contract, meanwhile, closed up 4 3/4 cents on the day at $6.58 a bushel.
