Canola caught in the doldrums, but a rally could break out

Farmers have seen their future earnings bleeding out for months. Anybody with unpriced canola has seen about a 20 percent drop in futures values since July. Cash prices are, of course, lower in this sort of environment.

It’s a bad way to enter winter and a puzzling one for some.

“It’s a bit of a mystery to me,” Stephen Nicholson, Rabobank’s Global Sector Strategist for Grains and Oilseeds, told me Nov. 27 as he was preparing for the GrowCanada conference in Calgary .

“Did the price get too high in 2022? Yes. Now we’re on the back side of that.”

The good news that Nicholson was taking to GrowCanada was that the outlook for canola prices is better than the present market is offering. There is new crushing demand for western Canadian canola and healthy export demand.

Across North America, demand for renewable diesel feedstocks like canola is surging. Currently, most demand comes from the West Coast, but more processing capacity is coming online in other parts of the continent as part of a long-term trend that is not abating.