The USDA stock supplies report (Sept. 30) gave a shot in the arm to canola prices, as the report showed smaller than anticipated stocks of both corn and soybeans. This news gave support to all of the commodity prices, according to Barry Coleman, executive director of the Northern Canola Growers Association.
Cash canola prices on the last day of September ranged from $16.71 to $17.57 per hundredweight, compared to the prior week when they averaged around $16.30, Coleman noted. The futures price was up $8 at $520 per metric ton.
“Farmer deliveries into the commercial pipeline has been heavy, even though it is in the middle of harvest season,” he said. “That seems to lend an element of temporary price pressure to the cash markets and in turn to the futures market.”
There are currently a number of factors that are raising concerns in the canola market, according to Coleman. These include the size of Canada’s crop this year, uncertainty of the size of the U.S. crop, dryness is Brazil and some talk that China may be winding down their aggressive buying spree of U.S. ag commodities.
“The fundamentals for the oilseed sector remain positive and canola demand is staying firm,” he said. “Exports are running about 30 percent higher than last year at this time and last year’s export figures were very good. The final numbers last year came in at 10.2 million metric tons (MMT) of canola that were exported, with good export demand for many countries – especially Europe, the leading export market for canola.”
Domestic crushers have reported they have adequate supplies for their immediate needs – holding 1.4 MMT, which Coleman said isn’t overly burdensome for canola.
In addition, most importers have covered their October through December requirements, but there is a significant open demand for January going forward. This means we will require a large amount of canola as we move forward into the marketing year.
The STATS Canada report recently came out and they increased their canola ending stocks from 1.7 to 2.2 MMT, and that change didn’t impact the market too much, according to Coleman. World canola production is expected to fall to an eight-year low this coming year, mainly due to production problems in Europe.
The North Dakota canola crop is well over 90 percent harvested and Coleman expected that harvest should be pretty well wrapped up by the end of the first week of October.
“Overall we have heard of very good yields from a lot producers and reported the canola yields were higher than they expected – they have been pleased with the results,” Coleman concluded.