Grain Market Update - Canola (September 2014)

The following graph shows the movement in WCE November 2014 Canola Futures and the domestic canola price delivered port. The graph clearly shows the decline in canola prices since early 2014. Current low canola prices on a world basis are the result of a strong world balance sheet and strong forecast US soybean crop.

Currently the basis is approximately $45 to $50/t over and analysts are suggesting there is little upside in world prices in the absence of a significant production failure.

Domestically it is unlikely crushers will be able to pay more than $460 to $480/tonne.

Given this, there seems to be little upside for canola prices in the short to medium term. As harvest approaches, small spikes in the market created by domestic crushers may be worth acting upon.

Currently the WCE Futures price is A$417/t equivalent and the domestic price delivered port is $456/t, reflecting a positive basis of A$39/tonne.