Canola Futures Performing Well

Winnipeg Commodity Exchange (WCE) canola futures continue to trade at a record pace in response to increasing interest from the domestic and international canola market. The volatile market prices observed over the past 12 months have been a key contributor to the interest in canola futures. WCE is pleased with the performance of canola futures relative to the cash market, with a strong correlation observed in relation to both the domestic and international cash market. Details of the performance of canola futures are available in the July issue of the WCE StatsBulletin. WCE publishes relevant cash price information on a daily basis. The reported price information indicates that best bid basis levels have been very strong relative to the corresponding nearby futures prices over the past few months. Individual companies have offered producers significant basis premiums for immediate delivery to encourage the producer deliveries needed to fulfill their canola requirements during the general downtrend in prices that has been observed over the past year. Producers who have shopped around for the best bids have been well-rewarded, with significant price differences observed between the individual companies. Producers who "locked-in" the futures price earlier this year, and coupled it with delivery or a basis contract in recent months with individual companies offering spot delivery premiums have been well-rewarded for their marketing efforts. As the 1998/99 crop year came to a close, a significant inverse developed in the market, with buyers willing to pay premiums relative to new crop prices to cover their immediate supply requirements. As these requirements were fulfilled, companies lowered their bids to reflect the anticipated realities of a large Canadian and international oilseed crop for 1999/00. However, WCE canola futures had provided producers with relatively attractive new crop pricing opportunities earlier this year, with a contract high for the November 1999 canola contract of $380.00 per tonne, compared to current prices of around $280.00 per tonne. WCE canola futures provide transparent, open access to all market participants, with recent weather-related market events highlighting the usefulness of WCE canola futures for price discovery and price risk management. For those interested in monitoring price developments throughout the trade day, WCE's web-site provides 15-minute delayed price quotes.