Crop year-end canola stocks are setting up to be the smallest in years.
‘Producers with unpriced canola remaining after the 2020 harvest have been delighted and amazed by the price increase since harvest,’ says Neil Blue, provincial crop market analyst with Alberta Agriculture and Forestry. ‘New record canola prices have been set for both futures and cash.’
Image 1. Average Central Alberta June 2021 Canola Price
‘Canadian canola demand has also been spectacular,’ adds Blue. ‘Canola exports are record high for this time in the crop year.’
According to Canadian Grain Commission data, as of April 4, bulk exports of canola from Canada this crop year are 8.19 million tonnes. That export number excludes the small amount of canola exported by container. Domestic canola crushing to date, at 7.25 million tonnes, is on pace with last year’s record level.
Estimated Canadian canola carryover last July 31 was 3.13 million tonnes. Statistics Canada has estimated 2020 Canadian canola crop production at 18.72 million tonnes. Adding in 100 thousand tonnes of imports results in total supply for this crop year of 21.95 million tonnes.
Canadian Grain Commission stats show that farmers have delivered 15.4 million tonnes of canola to elevators and crushers so far.
‘If the 2020 carryover and production numbers are correct, that leaves about 6.55 million tonnes left in farmers’ storage, with 17 weeks remaining in this crop year. That is an average of 385,000 tonnes per week, and remaining canola stocks will not drop to zero.’
The function of price is to meter supply out to the demand, adds Blue. Rising prices tend to discourage demand to prevent a shortage of product.
So far this crop year, farmers have delivered an average of 440,000 tonnes per week. During the first 2 weeks of April, Canadian canola exports and crush has averaged 482,000 tonnes a week. It appears that high canola prices have not yet reduced canola demand.
‘Despite the historically high canola prices, forward crusher margins are reportedly still very profitable. Meal prices have retreated since the highs in January, but vegetable oil prices are still high,’ says Blue.
Vegetable oil prices may drop with the expected increase in palm oil production and price. However, Blue points out 2 unknowns that may affect prices: remaining crusher demand to fulfill forward bookings of canola product sales, and remaining canola export demand for the balance of this crop year.
‘Also subject to adjustment is the size of last year’s canola crop and how much canola goes to the feed and waste category. Crop year-end canola stocks are setting up to be the smallest in years.’
Source : alberta