Canola prices were largely flat in March as markets eyed data from the USDA and Canada. Farmers and traders are trying to get a firmer grasp on expected U.S. and Canadian production after a series of conflicting reports indicated a wide range of expected production in the year ahead.
Before we get into those numbers, here’s a breakdown of the action on the contracts that we’re watching this month:
- May 2018: -0.2% or -$1.3 to $522.70 CAD / metric tonne
- July 2018: -0.1% or -$0.6 to $528.40 CAD / metric tonne
- Nov 2018: +0.3% or $1.3 to $516.60 CAD / metric tonne
- Jan 2019: +0.1% or $0.4 to $520.10 CAD / metric tonne
And this quarter:
- May 2018: +5.4% or $27.0 CAD / metric tonne
- July 2018: +5.4% or $27.1 CAD / metric tonne
- Nov 2018: +4.7% or $23.3 CAD / metric tonne
- Jan 2019: +4.6% or $22.8 CAD / metric tonne
This week, the USDA forecasted that U.S. canola acres will come in at 2.076 million. That figure is a 1,000-acre increase from last year. The small uptick comes at a time that the global canola/rapeseed markets are facing a shakeup due to inventory levels.
Last week, the International Grains Council issued its first forecasts for global rapeseed and canola. The council projected total output of 75.6 MMT, an increase over last year by roughly 900,000 MT and a new record high.
With that in mind, global consumption is expected to rise by about 1.7 MMT to 75.8 MMT, a figure that will help reduce total global stocks by about 300,000 MT. Both China and the European Union are expected to see the greater share of inventory declines.
Unfortunately, Australia, Canada, and Ukraine are expected to see a combined inventory level at the end of the next season at 3.1 MMT. This would be the largest combined figure among these key markets since 2009-10 and certainly will weigh on prices in these nations.
The IGC is projecting that canola output in Canada will hit 21.7 MMT, a new record and an overall year-over-year increase of about 400,000 MT.
The USDA is projecting a smaller crop at 20.5 MMT on the assumption that drier conditions in the Prairies will create parched seeding conditions and the possibility of fungal diseases impacting farmers that didn’t rotate crops.
In addition to the broader production trends, we dove deeper into the supply and demand factors that are affecting prices right now and in the months ahead. These stories include:
- How rising demand for canola will affect prices in the future,
- The potential fallout from Australian canola acreages estimates,
- What’s happening with Canadian canola basis; and
- The latest update on record global canola stocks.
Be sure to sign up for your free 3-week trial at GrainCents as this month could be the most impactful for how and when you price your canola for the rest of 2017/18 old crop supply, as well as a significant portion of your 2018/19 supply.