Bigger Crop but Canola Ending Stocks to Remain Tight

Agriculture Canada has ramped up its 2022 canola production estimate but new-crop ending stocks are still not expected to build much. 

In updated supply-demand estimates on Thursday that incorporate the Statistics Canada acreage report from earlier this month, the government pegged this year’s crop at 18.4 million tonnes, up from its June estimate of 17.95 million and 46% above the drought-reduced 2021 harvest of 12.59 million. If accurate, it would be the seventh largest canola crop on record. 

However, 2022-23 ending stocks are still seen at just 450,000 tonnes. That is down 50,000 tonnes from the June estimate and only 50,000 above the forecast for 2021-22. In the 2020-21 marketing year, canola ending stocks topped 1.7 million tonnes. 

With the average expected 2022 yield remaining unchanged from last month at 38.2 bu/acre, all this month’s increase in the production estimate is due to StatsCan’s July acreage estimate, which put canola planted area at 21.24 million acres, versus its initial spring projection of 20.89 million. 

Amid the larger crop, Ag Canada is projecting a sharp rebound in demand. Exports are now estimated at 9 million tonnes, up 200,000 from last month’s estimate and 75% above a year earlier. At an estimated 9.3 million tonnes, the domestic crush is up 300,000 tonnes from last month and 1 million above 2021-22.  

The season average canola price is forecast at $950/tonne this month, down $50 from June and about 10% below the record highs of 2021-22. 

Ag Canada warned its 2022-23 canola outlook remains sensitive to several factors, including growing conditions across Western Canada, the US and the world, supply chain shocks, shifts in trade patterns due to the Russian invasion of Ukraine, the biodiesel sector and the strength of Chinese oilseed buying. Assorted shocks such as fluctuating crude oil prices, inflation and rising interest rates, and recession fears may also impact the market, it said.