Canola prices soaring
Oil can be used for biodiesel or human consumption
Canola prices up, but wheat still number one crop in Canada
Crop prices have been soaring of late, but it’s the price farmers are getting for canola that is attracting attention. And that higher canola price is having an impact on planting decisions, with more hectares being dedicated to the golden crop.
Recent months have seen canola trading at levels not seen since 2008, with a price since April averaging $620/ton. To put that into context, canola averaged $540/ton in 2011 and $433/ton in 2010. Spring wheat has traditionally been the largest crop on the prairies, but lately, the price relative to canola hasn’t been keeping pace.
Recent history has seen a high degree of correlation between crop prices, energy prices and world economic growth. This is largely due to energy policy encouraging the use of ethanol and biodiesel. It’s also because energy itself represents a big cost in the production of crops and families in emerging markets like to eat better when their incomes increase.
Canola is being impacted by the forces impacting crop prices even more than other crops. This is largely due to the high quality and quantity of the oil produced by the canola seed. That oil can either go towards biodiesel or human consumption, with the remainder of the seed used to produce a protein meal used as animal feed.
According to Statistics Canada, wheat continues to be the largest crop planted in Canada, at 9.7 million hectares, but canola is a close second, at 8.6 million hectares. In Alberta, the amount of farmland dedicated to canola has jumped considerably, at 2.6 million hectares, a 24 per cent jump over the past five years.
| ATB Financial
Category: Alberta, Manitoba, Saskatchewan
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