While WCE canola futures prices have shown strong advances in the past several months, these increases have not kept pace with the price increases seen for CBOT soybean futures. This is shown in the unusually large discount that WCE canola futures are trading at relative to CBOT soybeans. While canola futures have traditionally traded at a premium to soybean futures, sometimes by as much as over $100.00CDN per metric tonne, canola futures are currently trading at a deep discount. This discount to CBOT soybeans reached a low of $78.49CDN per metric tonne on March 23, 2004 before narrowing somewhat at the end of the month. Reasons for the change in prices for WCE canola futures relative to CBOT soybean futures may include a relatively good canola crop during the 2003-2004 crop year while US soybean supplies were tight, and a relatively strong Canadian dollar relative to the US dollar.
New crop canola futures have also been participating in the canola price rally, with the November 2004 futures contract closing at $379.30 per tonne on March 31, 2004. The contract's highest close of $384.20 per metric tonne came on March 22. This comes after the November 2004 contract traded in an approximately $30.00 per tonne trading range for the previous twelve months. Strength in new crop futures prices comes despite the fact that many analysts anticipate an increase in acres seeded to canola in Western Canada for the 2004 growing season, perhaps suggesting that traders suspect that global oilseed demand will remain strong well into the next crop year.
