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September 21, 2011 14:59 ET

BMO Report: Price Outlook for Canadian Canola Remains Positive

Average prices in August were 22 per cent higher than a year ago

TORONTO, ONTARIO--(Marketwire - Sept. 21, 2011) - Global demand for canola – which is quickly becoming a Canadian super-crop, is helping to lift canola prices, according to a new report from BMO Economics.

The latest edition of The Goods: A Monthly Commodity Watch, shows that despite two months of modest declines, there is a strong price outlook for Canadian canola.

"Despite canola edging down 1 per cent in August to average C$558/tonne, the average prices in August remained about 22 per cent higher than a year ago," said Kenrick Jordan, Senior Economist, BMO Capital Markets. "Supporting canola over the past year have been solid demand, relatively tight oilseed supplies, and strong commodity markets for wheat and corn.

"Prices are likely to remain at robust levels, buoyed by strong demand from countries such as China, and expansion in the biofuel industry. Canola oil is also considered to be a very healthy oil, which is helping to boost consumer demand in global markets."

According to the BMO report, projections from the United States Department of Agriculture continue to point to a tight market balance for canola, with the ratio of global stocks to consumption remaining below long-term averages through the 2011-12 crop year.

Stretched canola supplies, along with reduced expectations for soybean availability, should underpin canola at relatively high, if modestly lower, prices through next year. Average canola prices are expected to hit C$570 in 2011 and return to $550 in 2012.

For a full copy of the report, go to www.bmocm.com/economics.

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