Provincial crop analyst Neil Blue looks at recent changes to the canola market.
“The Canada Grain Commission (CGC) provides weekly updates of bulk crop deliveries, exports and domestic use,” says Blue. “The CGC numbers need to be adjusted to account for on-farm and other feeding. However, for crops like canola, little of which is used for feed or seed, the CGC numbers provide an accurate estimate of deliveries, movement from elevators, domestic use and exports.”
China suspended the canola export permits of Richardson-Pioneer and Viterra in March 2019, and that suspension continues today. Canola seed shipments to China have fallen to about 30% of last crop year. Canola carryover on August 1, 2019 was an estimated record-high near 4 million tonnes.
He says that canola supply-demand estimates made last fall projected canola exports during this crop year to be at best just above 9 million tonnes, similar to the prior crop year and down from the record 11 million tonnes in 2016-17.
“Domestic canola use, almost all for crushing, was estimated unchanged from the last 2 years - nearly 9.3 million tonnes. Early estimates were for canola carryover to rise to a new record 4.5 million tonnes, quite possibly a price depressing level. However, with as much as 2 million acres of Prairie canola yet to harvest as of December, the estimates became uncertain. Then came demand.”
Latest CGC statistics for canola movement from August 1, 2019 to April 19, 2020 (million tonnes)
Blue says that one result of China’s slowing of Canada’s canola exports was stronger domestic crush margins.
“Canola seed prices fell relative to canola oil and canola meal values. With more incentive to crush and an expanded crush capacity in recent years, the canola crush level is now headed for a record. Exports of canola seed are doing well so far, with increased exports to Belgium, France, Germany, Greece, Portugal, Bangladesh, Pakistan and the United Arab Emirates, offsetting much of the lower exports to China.”
He adds that recent estimates of canola carryover at the July 31 crop year-end have fallen to 3.2 million tonnes, with some estimates as low as 2.5 million.
“Uncertain quality and quantity of spring-harvested canola, together with additional demand leaves the last quarter of the crop year to determine that carryover result. Whatever that level is, it will be a great improvement over last fall’s estimate and one more likely to enhance the pricing opportunities during this growing season.”
Source : alberta.ca