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US canola cruse pace rebounds in late October

Canola

The U.S. is ramping up canola crushing with strong demand for vegetable oils. In looking at the U.S. canola crush pace, USDA’s latest Oils & Fats Report shows that 33 percent more canola has been crushed in the current crop year compared to last year. In August, 175,070 tons have been processed compared to 131,150 in the same period last year. When compared to two years ago, the pace is below the 202,000 tons crushed. The U.S. is expected to ramp up canola crush to 2.1 million metric tons (MMT) in the current crop year and even show exports of approximately 180,000 metric tons (MT).

The canola crush pace in Canada has increased dramatically in the last month, but still lags the amount needed to meet its expectations of 10 MMT of canola crush this crop year. The later-than-normal harvest has delayed activity more than normal at the start of the crop year, and both crush and export pace is expected to ramp up significantly.

In the latest WASDE report, European rapeseed production was increased by 1 MMT, while Canadian canola production was reduced by 0.5 MMT from lower yield estimates. Agriculture & Agrifood Canada left the ending stocks figure unchanged in its latest estimates at 500,000 MT.

Global canola production is forecast at 83.80 MMT, with larger crops in the U.S. and Europe offsetting the smaller Canadian canola crop.

The January ICE canola contract finished the session on Oct. 26 at $876 per MT, up $9.50 on the day and up $4 per MT in the last two weeks. The March canola contract ended at $880 per MT, also up in the last two weeks. The November contract rose an unusually large amount due to traders exiting their positions in the contract before its expiration. It is interesting to note that soybean oil has charged 12 percent higher in the last two weeks while soybeans and canola have moved only 1 percent higher. This is mainly due to a report of lower-than-expected soybean oil inventories in the U.S. in September. Crush margins for canola and soybeans are at very high levels.

Strength in palm oil prices have helped soybean and canola oil values. Palm oil prices are reported to have bottomed out after a turn lower this summer and are expected to continue to strengthen based on increased demand, adverse weather in Indonesia, and tightening supplies in China.

Local cash prices are getting closer to the $30 mark. As of Oct. 26, prices at nearby crush plants ranged from $28.21 to $29.69 for October deliveries and $28.47 to $29.80 for November deliveries, up over $1 per hundredweight in the last two weeks.

The Northern Canola Growers Association will hold its 15th Annual Canola Research Conference on Wednesday, Nov. 16, at North Dakota State University in Fargo. It will also hold its 25th Annual Canola Expo in conjunction with the Prairie Grains Conference on Dec. 7-8 in Grand Forks. The event will feature presentations on insights in canola diseases, new tools for flea beetle control in canola, and the Annual Meeting of the Northern Canola Growers Association. Those interested in attending can get more information at www.northerncanola.com.

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