Market Insight: Canola prices remain volatile

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Published: July 17, 2008

November futures had spent the last month trading within a $40 per tonne range
before being dragged lower this week, as both canola fundamentals and outside markets
influence prices.

Concerns about crop conditions, relatively good exports, and domestic
crush being on pace to set a new record this crop year have provided some support to
values. However, extreme volatility and recent price pressure for both soybeans and
crude oil have weighed on the canola market.

There are still many uncertainties facing the canola market going forward. Canola crop

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conditions are lagging in parts of the Prairies, while the Ukraine has increased
production. The outcome of the Australian crop is still unknown, as well.

Although
soybean conditions have improved in the U.S. after a late start, the old-crop carryout is
tight and the market will remain very sensitive to any more yield threats.

Further adding
to the uncertainty are the potential for the U.S. to draw more Conservation Reserve Program (CRP) acres into production,
continued talk of lawmakers reining in speculators in commodity markets and ongoing
volatility in the energy markets. All of this will keep prices highly variable throughout

the rest of the summer.

– The FarmLink Market Insight was researched and produced by FarmLink Marketing Solutions, a marketing advisory service for Prairie farmers, and is published here with permission of the authors.

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