Canola and wheat futures prices have been riding a wave over the last few weeks, says a Commodities & Investment Advisor and Portfolio Manager with Ventum Financial in Winnipeg.
David Derwin says the November canola contract hit a high of $840 a tonne in late July, then dropped to around $750 a tonne before climbing up to around $780 in recent trading.
November canola closed Tuesday at $781, down $13.90, according to BarChart.com.
Derwin says a few factors were in play with canola.
The price of crude oil was around $91 a barrel in late July before falling to as low as $74 last week then rising to $83 as of Tuesday.
He said, "the fact that crude oil had a bit of a pullback and now a little bit of a float back up these last couple of days would have that typical influence on canola."
The weather from hail and a heatwave in July to the heavy rain in June "had maybe some impact", Derwin said.
"And now the seasonals tend to kick in at this time of year and financial gravity tends to take over and pull grain prices down into the September-October timeframe into the harvest. So that's, I would say, some of the main factors that we're seeing." he added.
Canola has been following a similar up-and-down pattern with soybean prices.
North America is not the only growing region seeing this trend, he said.
"We also had a scenario here too where the French European rapeseed crop had exhibited a somewhat similar pattern as well, where that third week in July it was hitting some high levels and about €570 per tonne and then it dropped back down to just under €500. So now it's up to about €540 a tonne per euro, so it too has exhibited a similar pattern," Derwin stated. "So what we are seeing here is certainly not unique to canola."
On wheat prices, Derwin noted all the wheat markets – Minneapolis, Kansas City, and Chicago – also had a similar trend with canola.
In Tuesday trading, the September Minneapolis wheat contract closed at $6.59 1/4 cents a bushel, down 10 3/4 cents on the day. September Kansas City wheat closed at $6.99 1/4, down 14 1/4 cents. September Chicago wheat closed at $6.30 1/4, down 10 1/4 cents.
Factors for wheat are related to harvest pressure and seasonal trends.
Derwin reminds producers to observe the markets closely and lock in the best price possible.
