Canola prices are set to remain strong well into next year, according to a new report from BMO.

BMO economists are expecting canola to average $570 (Cdn) per tonne for 2011 and $550 (Cdn) in 2012.

"There continues to be a good story in canola markets," says BMO National Agriculture Manager David Rinneard. "Prices are projected to come back marginally, but they're still well over where they were last year, and considerably better than they were in the past. They're more than double where they were five years ago and triple the price of canola from the beginning of 2001."

"Certainly there's solid demand. Demand that's coming from traditional sources in canola oil for human consumption. Certainly there's a penchant for canola to be utilized in feed for animals, and certainly there's demand for biodiesel products," he says. "In addition to that, the oilseed supplies have continued to be tight, and commodity markets for other oilseeds are helping underpin success in canola markets."

He adds the stocks-to-consumption ratio is expected to remain below long-term averages through the 2011-12 crop year.