Canola prices showed improvement during the last two weeks of March, according to Barry Coleman, executive director of the Northern Canola Growers Association. Cash canola prices ranged from $14.41 to $15.60 per hundredweight at the area crush plants, which is up 40-50 cents since March 21. May canola futures were $463.00 as of March 27.

The USDA recently released the Global Production Estimate of canola and indicated the total worldwide ending stocks of canola have slipped to a low that was last seen in 2016, according to Coleman.

“Given the present tightness of the world vegetable oil situation, canola continues to be undervalued, but things are not trading on just the canola fundamentals,” he said. “Canola has been able to draw much of its price strength lately from the weakening Canadian dollar – it’s been 76 cents for the last number of years, but all of a sudden it has dropped into the upper 60 cent range. For the week ending March 27, the Canadian dollar stood at 71.6 cents, which has been supportive of canola prices.”

However, other factors in the market are keep canola prices from making a significant price improvement. Declining crude oil prices have caused biodiesel prices to drop. About 21 percent of U.S. canola production is used in biodiesel production and 32 percent of U.S. soybeans, he said.

The demand for canola has also decreased due the restaurant closings due to the coronavirus pandemic that is sweeping the world.

“Canola oil is used in a lot of fryers across the country, and with the drop-off in restaurant customers, it will impact the canola market for the short-term,” he said.

A positive impact on vegetable oil prices is the decline in palm oil production in Malaysia, the largest palm oil production country in the world. The shutdown of many of these areas will have a positive impact on vegetable oil prices, he said.

“Also, the CGC (Canadian Grain Commission) report indicated that our current export pace has finally overtaken last year’s level. Since last August, the pace had been running behind,” Coleman said. “Domestic canola usage continues ahead of last year’s level – 6.65 million tons compared to 5.7 million tons last year, so that is up considerably.”

Finally, here is some information from the USDA’s Economic Research Service annual Oil Crops Yearbook, which is published once a year. It shows the canola crop crush was steady this year at 3.8 million tons and the value of the canola crop was pegged at $494 million, which is down 13 percent from last year, Coleman noted.

The use of canola in biodiesel was steady at 1.2 million tons, which accounts for 21 percent of the canola oil use, but that is down 14 percent from two years ago.

“This means we have seen some market destruction from the federal government allowing some refinery exemptions,” Coleman said.

The report went on to say the total domestic disappearance for canola was up 4 percent, while the other oil seeds disappearance was up only 1 percent. Average season price was $14.50, which was down 8 percent from last year and down 17 percent from two years ago.