Canola prices continue to be range-bound, according to Barry Coleman, executive director of the Northern Canola Growers Association. Cash prices on Sept. 4 ranged from $14.04-$14.45 per hundredweight, while the November futures prices were listed at $447 a ton.
“We haven’t seen much movement at all in prices with canola stuck in the range-bound trading area that is limited by the continuing trade situation with China,” Coleman said.
Coleman recently listened in on a webinar with the Canola Council of Canada and the purpose of the webinar was to inform Canadian farmers of the steps they will need to take to get certification for shipping canola to the European Union (EU), who will be using it in their production of biodiesel.
They are talking about importing between 1-3 million tons of canola into the EU from the Canadian market. However, farmers will need to get a sustainability certificate for their farm, but it was felt the majority of farmers would be able to meet the sustainability requirements in order to export to Europe.
“This would move more canola out of North America and into the export markets,” he noted. “We aren’t talking about a price rebound. Although the crop is being moved, it is moving at significantly lower price levels than what is typical, since canola going into the biodiesel market is usually marketed at the floor prices for canola.”
He also mentioned another report that he had seen that compared canola prices in North America to prices in Europe. The spread between the prices in Europe and the prices here has been strengthening since April 2018. It recently reached a level of $118 a ton higher in Europe than it is here, and the typical price spread over the past five years has been $57 a ton.
“This means the lower prices in North America are certainly supporting the Europeans looking this way to grab some canola for their market,” he said. “Without the current closing of the Canada’s loss of the Chinese canola purchases I would expect to see that spread at the typical levels of around $57 a ton.”
Agriculture Ag Food Canada recently announced they have reduced the carryout stocks to 3.7 million tons, which is a decrease of 0.2 million tons from last month’s report. The crush was a little bit stronger and the exports a little bit higher than last month’s predictions, which is a little bit of good news for canola.
The domestic processing of canola is still forecast at about 9.3 million tons, with the industry expected to operate at near full capacity. Worldwide production of canola is expected to be at a four-year low, based on a recent USDA outlook with estimates a 68 million ton crop compared to 70 million tons for last year and 73 million for a couple of years ago. Production in the U.S. is expected to remain steady at 1.6 million tons.
The latest National Ag Statistics Service weekly report indicated 21 percent of the canola crop was harvested, well behind 57 percent last year and 53 percent on average, with 69 percent of the crop not harvested listed in good-to-excellent condition.