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November canola tops $1,000 per ton

Canola

New crop canola keeps climbing higher, reaching $1,029 on April 13 as continuing global issues impact commodity markets. With the North American canola crop supplies running low, exports out of Vancouver dropped to only 800 metric tons (MT) recently. Market analysts say you must go back 35 years since canola exports were this low at this point in the crop year. Canola supply for crush is expected to run out in the first half of June.

The spring snowstorm that just hit the region will delay canola plantings in North Dakota, however the moisture this will bring to the western part of the state was crucial for everyone. The eastern prairies of Canada will also benefit, but the system missed much of the canola growing regions in Saskatchewan and Alberta and will not provide relief to those dry areas. As a result, there has not been a drop in canola prices in anticipation of increased production from this new moisture outlook.

In the March 30 Prospective Plantings Report, the USDA predicts North Dakota canola producers will again plant record acres of canola in 2022 in its Annual Prospective Plantings Report. It forecasts North Dakota acreage of 1.76 million. While this is a record, many industry observers expected a larger increase because canola prices are at record levels as demand from the food and fuel industry increases. The next acreage report will be released June 30 when the USDA issues is June Acreage Report. Acres should be close to 2 million in North Dakota unless the state faces unforeseen planting delays.

For the U.S., the USDA said producers intend to plant a record high 2.16 million acres in 2022, up less than 1 percent from last year’s planted area. Compared with last year, planted area is expected to increase or remain unchanged in five of the six major canola-producing states, with Montana representing the only state expecting a decline. With a return to normal yields, canola production has the potential to reach a record 4 billion pounds, an increase of 47 percent.

The USDA updated rapeseed ending stocks in its World Agricultural Supply and Demand Report (WASDE) recently. It pegged world ending stocks at 4.3 million metric tons (MMT). This is the lowest stocks level since the 2003 crop. It also reduced rapeseed oil ending stocks to 2.59 MMT.

The USDA also gave its predictions for canola production in Australia. It said production will drop from high levels last year of 6.3 MMT to approximately 4.7 MMT due mainly to rotational issues. This will be the second-largest crop in history for Australia. Yields are expected to drop due to tight fertilizer supplies. In fact, one of the reasons that analysts have recently predicted the global commodity boom will continue is the tight supply and high prices of fertilizer. It has even been said that fertilizer will be more important than global weather in deciding the upcoming production of all the major commodities.

In other canola news, President Biden announced various actions related to biofuels at an event in Iowa and expanding the use of canola oil was among them. A fact sheet released states that the EPA is proposing a new approval for canola oil that will add new pathways for fuels to participate in the Renewable Fuel Standard program to provide renewable diesel, jet fuel, and other fuels. This action is said to provide greenhouse gas benefits. This is the canola petition that the canola industry has been working on for over two years. The day after the announcement, the EPA published the proposed rule and has provided for a 30-day public comment period.

Local cash prices, as of April 13, at nearby crush plants ranged from $40.74 to $42.33 for April through May deliveries. New crop canola prices have continued to run, ranging from $35.43 to $36.55, increasing again by over $2 in the first two weeks of April.

May canola closed at $1,155 per MT on April 13, up $20 per MT since the first of the month. The all-important November contract closed at $1,029 per MT, up a remarkable $68 per MT since the beginning of the month, $140 per MT since the first of March, and $268 per MT since December.

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