The Jul 02/Nov 02 canola spread began the crop year trading at a significant inverse, something not seen in the previous two years. As recent as December 2001 the Jul 02/Nov 02 spread was at approximately a $30/tonne inverse. Since then it has narrowed to end the month of March at a $5.00/tonne inverse, a level more typical of the previous two years.
During the month of March, while old crop canola prices declined relative to new crop canola prices, spot price elevator basis levels were also widening out slightly. Within the canola contract's par region (an area around Saskatoon), the best elevator basis to the nearby canola futures reached a high of $0.10/tonne under the futures at the end of February 2002. Since then the basis has widened, ending the month at $11.00/tonne under the futures - still a relatively high basis level from a historical perspective, but none-the-less, an indication that there is less of an immediate concern regarding old crop canola supplies.
Recent price developments will play a role in the planting decisions of Canadian producers, with Statistics Canada scheduled to release the March seeding intentions report on April 24, 2002.
