Canola prices followed soybean prices lower in August as concerns about U.S. trade relations with China continued to push pressure on the sectors. Before we jump into some of the supply and demand factors impacting canola prices, let’s take a look at futures contracts in the complex.
In the month of August, canola prices were 1% lower than where they finished July. More notably, 2019/20 new crop canola prices were down 2.4% in August, dropping more than $12 CAD / MT.
For our GrainCents readers, we’re watching a variety of factors that might affect canola prices: 3 are bearish, 4 are bullish, and 1 is noise.
(If you’re not familiar with what “noise” is, then we recommend you check out our GrainCents risk management process towards canola prices.)
This month, GrainCents investigated topics such as:
- Declining canola production seen in the August WASDE report,
- Sliding canola prices, thanks to trade spats, and
- StatsCan’s estimates for Canadian canola production
Late last week, Saskatchewan Agriculture provided their first estimate of the province’s yield, calling for 33 bushels per acre of canola. This is 15% below last year’s Saskatchewan yield for canola of 38.9 bushels per acre. The 5-year average yield for canola in Saskatchewan is 38.1 bushels per acre, meaning this year’s crop is below the average.
Although this may seem like a significant year-over-year decline, it is important to note that Saskatchewan Agriculture’s first estimate of the 2017/18 canola crop was 31 bushels per acre, which means that the crop got bigger as the harvest went on.
For further perspective, in last week’s digest, we reminded you that Alberta Agriculture says that their provincial canola yield was looking like 39.4 bushels per acre. That is 7% below the 5-year average of 42.2 bushels per acre and 10% below last year’s average haul of 43.7 bushels per acre.
Nationally, Statistics Canada said on Friday that canola yields would come in at 37.5 bushels per acre this year.
For our GrainCents readers, we’ll be continuing to monitor the harvest progress, yield updates, and subsequent effects on canola prices very closely.