Canola supplies will likely be tight leading up to harvest this fall, and could be even tighter in 2017 based on StatsCan estimates, average yields and demand trends.
“The market is definitely telling us supplies are not going to be as abundant as what we’ve had over the last few years, and I would say it will probably be even tighter than what was anticipated” explains Brian Voth of Prairie Farm Consulting.
According to Statistics Canada’s estimates, total demand for 2015-16 is on pace to reach 18 million tonnes, reaching ending stocks this summer of roughly 1.4 million tonnes, he says.
“That’s starting to get to the tight side, and that’s what the market is starting to reflect now,” notes Voth. “Especially as you start to see July futures inverse over November.”
The agency’s acreage estimate for canola in late April came in well below the trade’s average guess, but if StatsCan is accurate in projecting only 19.3 million acres of production this summer and we don’t see a bumper crop, the balance sheet will get even tighter next year.
“If you use Stats Canada’s (acreage) number at 19.3, an average 2 percent abandonment rate and a 35 bushel trendline yield, it gives you about 15 million tonnes of production,” he explains.
With the canola crush plant at Ste. Agathe, Man. humming in the background, Voth describes the scene in the canola market as the 2016 growing season begins.
To continue the math, if you add the 1.4 million tonnes left over from 2015-16, the total Canadian canola supply for 2016-17 would be around 16.5 million tonnes.
Source : Albertacanola