Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.

Soybeans are lower following the Pro Farmer estimate of the US soybean yield for the 20022/23 crop at 51.7 bushels per acre. This is slightly lower than the last USDA estimate but still a record crop.
Brazil’s CONAB also suggested that Brazil would have a record crop in 2022/23, based on the acreage being extended by 4 percent.
Corn rallied leaving the corn/soybean ratio at 2.10 which in our view is far too low.
Drought conditions continue in China and parts of Europe, and there are suggestions this weather will continue through November.
In week 3 canola growers delivered 123,100 tonnes of old crop canola meaning the canola carry-in was at least 1 MMT.

Conditions in the US remain good for harvest and there are no apparent signs of frost on the horizon.
Asian oilseed prices have all firmed.
Oilseed meal prices are underpriced to corn.
The US dollar is very strong and the Fed’s suggestion of higher interest rates is discouraging buyers.
Oilseed prices are heavily discounted to feed grains.

Soybeans
Current market situation:

Soybeans are starting the week lower based on the Pro Farmer crop tour yield for the US and suggestions of a record crop in Brazil.
Futures are extremely volatile but we are told the volume of trade is low.
US soybean crush margins are very strong on increased meal potential.
Pro Farmer and other US analysts recommend growers be sold 50 percent of their expected soybean production at current prices.
Soyoil retains 57 percent of soybean value whilst the actual yield is only 18 percent.
China was a good buyer of soybeans which is encouraging. We expect more China sales this week.

Market outlook:

For the present, oilseeds are on the backseat whilst the market comes to grips with the low yield for corn and high yields for soybeans suggested by the Pro Farmer crop tour.
Chinese demand remains the key factor.
Whilst a bigger crop is forecast for South America, it is a long time before the Brazilian crop is in the bin.
In the meantime, all demand is taken to the US.
Canola exports need to increase if canola is to maintain its price.
The current US dollar strength is a problem for buyers and slowing demand at present.
Inflation and the call for higher interest rates reduces demand in the short-term.

We hear that the railcars for grain are in short supply as the railroads chase higher returns for short-haul coal traffic.
Canola crush margins remain excellent as crushers widen their margins.
Saskatchewan growers in the south of the province say they will start harvest in 10 days.
Canola is currently undervalued compared to soybeans.
The oil in canola is worth 99 percent of canola cost.
We would not sell canola whilst oilseeds are at such a wide discount to corn.

Current market situation:

Crushers are making excellent margins.
Grower deliveries will increase as new crop harvest begins in two weeks.
Export sales of seed need to increase.
Exports to the European Union will be lower as we expect a good crop in Eastern Europe.
We need more seed export sales to China in particular.

Canola Market Outlook: August 29, 2022

Contact Us