Growers are cashing in on canola, locking in tonnes and planting more hectares after the oilseed hit $610 a tonne last week.
It's the third time since the beginning of April that canola prices have rallied above the $610/t mark, with the price spike coming on the back of strong European and Canadian futures and a weakening Australian dollar.
While the market might have come back about $20/t in the past week, Glencore Grain State manager Rob Haddrill said it was more than likely to rebound.
"Canola prices have come back this week - Friday night there was a massive selloff of soya beans on the futures based on a few rumours about some banks and hedge funds losing money on beans," Mr Haddrill said.
"That spooked the market but the fundamentals underneath the oilseed market are still quite strong."
Canola prices dropped $6/t overnight on Monday, to a top price of $589/t on Tuesday, offered by both Glencore and Emerald.
According to Gavilon wheat trading manager Chris Brown, that volatility in the canola market was driven by a tight balance sheet for soya beans.
"The main problem for canola is the volatility it's been experiencing from the soya bean market in the US, Argentina and Brazil," he said.
"Those crops have been reduced by drought, which is what got the canola price so high in the first place.
"What has driven it down is the recent US Department of Agriculture report, which showed an extremely tight balance sheet for soya beans in the US but high soybean stocks globally."
However, analysts have tipped the outlook for canola will remain bullish and Emerald general manager of risk and pricing David Johnson said there would be more opportunities for growers to capture premiums.
"There are opportunities for price spikes this year, which will be probably driven by what happens with the US corn and soya bean crops," he said.
"The market has factored in big crops but they have only just been sown. We are just entering the period of likely weather volatility from the northern hemisphere."
Last week's price spike once again had growers topping up forward selling contracts.
Farmanco grain marketing consultant Don McTaggart said that with recent rain and prices hovering around $600/t some growers had locked in up to 20 to 25 per cent of their canola program.
"When you look at the canola prices at $610/t from a five-year perspective would be in the top 20 per cent of prices. From a 10-year perspective it's in the top 10 per cent of prices," Mr McTaggart said.
"That's compared to wheat currently, where at $250/t for new season wheat it's probably in the bottom 35 per cent of prices.
"On average basically anyone that is serious about growing canola and is in remotely reliable area would have taken advantage of the current prices."
Mark and John Flannagan, who farm out of Mullewa and Pindar, locked in 20 per cent of their canola when the price went above $600 last week. The brothers sowed 1350 hectares of canola this season, about 250ha more than last year.
"We had 39mm last weekend and as the canola came out of the ground, we locked it in," he said.
"We were happy with that pricing but that price is so high because the risk is so high.
"It is really early in the season and everybody's canola is coming out of ground.
"We are planning to have about 7000ha of wheat, so canola is a small part of the program and that little bit isn't going to make a huge difference."
But not everyone is prepared to take the risk of forward selling canola so early in the season.
Merredin farmer Ben Johnston increased his canola program from 150ha to 200ha this year and although the price increase has boosted his confidence, he's still not forward selling.
"It is encouraging that the canola price is up at this time of year, but the key for us is growing it," he said.
"We would not lock canola in because the production risk out here is too high."
This year Ben's family took on 800ha of extra leased country to put in additional crop and accommodate more sheep.The Johnstons are close to halfway through their 4000ha cropping program, increased by 500ha since last year. He said sheep were a saving grace for his family over the past few seasons, as grain prices dipped.
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