Canola Market Outlook: April 1, 2024
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Soybeans: CBOT soybeans and meal ended the week little changed, and soybean oil gained 31 points ($7/MT).
The USDA Prospective Plantings Report on March 28th had 2024 acres slightly below the average trade guess, but 3 million acres above last year.
Soybean stocks came in pretty close to the average trade guess and 160 million bu above last year.
The market will focus attention on cash market demand by China and the recovery in Argentine production.
Canola: YTD total canola disappearance into week 34 of the crop year amounts to 11.2 million MT compared to 12.7 million MT last year and is down 12% on last year.
Crush margins remain satisfactory for the large plants. And with recent improvements in exports, if they can be maintained, we could reach our export estimate of 6.5 million MT for this ongoing crop year.
Regarding new crop ‘24/25 canola, we expect that our estimate of plantings down by 10 percent is too much down and 4 percent more realistic. But unless usage is higher than expected or yields lower, the higher acreage shows the ‘24/25 market as oversupplied.
With most European markets still closed for Easter this Monday, we would leave them alone this week.
Oilseed Market Backdrop
Soybeans
Current market situation
CBOT soybeans and meal ended the week little changed, and soybean oil gained 31 points ($7/MT).
The USDA Prospective Plantings Report last Thursday (March 28th) had 2024 acres slightly below the average trade guess, but 3 million acres above last year. Specifically, US farmers intend to plant 86.51 million acres to soybeans this spring, up 3% from 83.6 million acres in 2023. This was 20,000 acres below the average of pre-report trade projections that ranged from 85.35 million acres to 88 million acres. The record planted area was 90.16 million acres in 2017. The five-year average soybean planted area was 83. 54 million acres. According to the USDA, corn-soybean acres are down 1.7 million acres, or 1%, from 2023.
Soybean stocks came in pretty close to the average trade guess and 160 million bu above last year.
In S America, the range of crop estimates for Brazil remains very wide with one private forecaster last week increasing the crop to 156 million MT from 152 million MT previously. Farmers there remain careful sellers, but the issue seems to be more one of price than yield. BAGE in Argentina has their harvest just starting, and lowered ratings from 31% Gd/Exc to 29%.
All Asian markets looked weaker last week as Chinese demand quietens.
Market outlook
The USDA Plantings and Stocks reports did little to alter prices. The market will focus attention on cash market demand by China and the recovery in Argentine production.
Canola Market
Canola usage
During week 34 of the crop year, growers delivered 507 thousand MT of canola into primary elevators, exports were a good 245 thousand MT, while the domestic disappearance amounted to 190 thousand MT.
YTD total canola disappearance into week 34 of the crop year amounts to 11.2 million MT compared to 12.7 million MT last year and is down 12% on last year.
Visible stocks increased tot 1.38 million MT, with 926 thousand MT in primary elevators, 222 thousand MT in process elevators, 106 thousand MT in Vancouver/ Prince Rupert, and 121 thousand MT in eastern ports.
Current market situation
Crush margins remain satisfactory for the large plants. And with recent improvements in exports, if they can be maintained, we could reach our export estimate of 6.5 million MT for this ongoing crop year.
Regarding new crop ‘24/25 canola, we expect that our estimate of plantings down by 10 percent is too much down and 4 percent more realistic. We have raised our yield a bit and increased plantings for next year in our balance sheet. In our view, longer term markets look a little bearish. However, weather remains difficult to predict, so we leave the new crop alone for now.
International rapeseed-canola markets were generally firm and rallied to 3-month highs, supported by strong biodiesel margins and slow imports. Rapeseed oil Fob Dutch mills is quite stable around €910/MT, as it prices favourably against RME biodiesel. Meanwhile, sunflower oil in is lingering around the $950/MT level.
The Ukraine is currently trying to flush out tax evaders in the cash traded oilseed market, which could lead to some defaults.
Market outlook
Oilseeds markets will focus their attention on cash market demand to China and the recovery in Argentine soybean production.
Action
With most European markets still closed for Easter this Monday, we would leave them alone this week.
Canola – Topics of Interest
EU Rapeseed Imports
According to the EU Commission, EU-27 rapeseed imports in the current 2023/24 crop year (July-February) amount to 3.5 million MT, falling as much as one third short of the previous year's volume. However, last year’s imports had risen substantially, and the somewhat larger EU rapeseed harvest reduced import needs. The import volume still exceeds that of the 2021/22 season by 6 per cent.
Importantly, imports from Canada dwindled to almost nothing this crop year:
