Canola Market Outlook: July 2, 2024
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Soybeans: CBOT soybeans initially got a bounce out of the USDA acreage and stocks reports on Friday but failed to hold. August posted a weekly loss of 13 ½ cents.
The USDA acreage number came in at 86.1 million acres, which the trade missed by 650,000 acres. June stocks were a touch above expectation at 970 million bushels, and US export sales of 283,000 MT were below even the lowest trade guesses of 300-600,000 MT.
Vegetable oils are finally getting a bit of life and it will be interesting to see if they can sustain a rally. But in our view, soybeans remain at a too big premium to feed grains.
Canola: YTD total canola disappearance into week 47 of the crop year amounts to 16.1 million MT compared to 16.7 million MT last year and is down 4% on last year.
Crop conditions: SK Ag rated 77% of SK canola to be Gd/Exc condition, down just 1% from the June 10 rating. AB Ag rated 70% of AB canola in Gd/Exc condition. MB Ag does not assess crop ratings, but some areas are experiencing significant moisture stress.
StatsCan published their latest acreage figures, which estimated the area planted to canola at 22 million acres for 2024, now down just 0.34% from 2023.
Matif rapeseed again traded higher as additional disappointing yields threaten to lower production ideas below the 18 million MT mark.
While European rapeseed crops are lower and we see better oil share in the crush, we see no reason to chase canola sales at present.
Oilseed Market Backdrop
Soybeans
Current market situation
CBOT soybeans initially got a bounce out of the USDA acreage and stocks reports on Friday, but failed to hold, as contracts closed mixed, with nearbys down ¾ to 3 cents. New crops was leading the way on the smaller acreage number, and August was down 70 cents during June, with the weekly loss at 13 ½ cents. Soybean meal futures were down 60 cents to $3.20/ton, with soybean oil futures up 14 to 34 points.
The USDA acreage number came in at 86.1 million acres, which the trade missed by 650,000 acres. June stocks were a touch above expectation at 970 million bushels, and US export sales of 283,000 MT were below even the lowest trade guesses of 300-600,000 MT.
Argentina maintained their 50.5 million MT crop number, compared to the USDA's 50 million tonnes. Unfortunately, there remains a distinct lack of demand for US soybeans from China, and some expect the total Chinese imports to be lower.
Market outlook
Vegetable oils are finally getting a bit of life and it will be interesting to see if they can sustain a rally amidst a consensus that the oil share should find support: Driven higher by rising vegetable oil prices, Chinese soybeans and meal started the week on a strong note. Soybean oil, palm oil and rapeseed oil were all firm in Dalian and have jumped to 1-month highs. Bursa palm oil is also trading higher overnight as it retests the May highs. Palm oil production in June is forecast to decline 6% on last year.
However, in our view, soybeans remain at a too big premium to feed grains.
Canola Market
Canola usage
During week 47 of the crop year, growers delivered a solid 437 thousand MT of canola into primary elevators, exports were 185 thousand MT, while domestic disappearance amounted to 200 thousand MT.
YTD total canola disappearance into week 47 of the crop year amounts to 16.1 million MT compared to 16.7 million MT last year and is down 4% on last year.
Visible stocks were at 1.25 million MT, with 744 thousand MT in primary elevators, 139 thousand MT in process elevators, 192 thousand MT in Vancouver/ Prince Rupert, and 179 thousand MT in eastern ports.
Current market situation
On Thursday, StatsCan published their latest acreage figures, which estimated the area planted to canola at 22 million acres for 2024, now down just 0.34% from 2023. This was also higher than the 21.52 million acres that analysts had expected on average. In our view, StatsCan numbers are increasingly unreliable, and we think these numbers are too.
We have left our balance sheet unchanged. However, we could be a little low on total exports.
Cdn. Crop Conditions: SK Ag rated 77% of SK canola to be Gd/Exc condition, down just 1% from the June 10 rating. AB Ag rated 70% of AB canola in Gd/Exc condition. MB Ag does not assess crop ratings, but some areas are experiencing significant moisture stress.
US Canola acres: USDA estimated the area planted to canola in the USA at 2.66 million acres, up 14% from last year’s canola acres. The area harvest is estimated to be up by 13%. Given average yields, US 2024 canola production is estimated at 2.66 million MT, up 14% from 2.34 million MT last year.
In N Dakota, 67% of canola was rated Gd/Exc, 27% was rated Fair, and 6% Poor/ V Poor. Blooming was 28%, behind 39% last year, and near 32% average.
In Europe, Stratégie Grains revised the EU’s 2024 rapeseed harvest estimate down to 17.80 million MT, a slight decrease from the 17.94 million tonnes projected in June. This new forecast is 10.6% lower than last year’s harvest. The change is attributed to less favourable growing conditions Germany, Romania, and the Baltic countries suffered during May. EU rapeseed was supported as most harvest yield and oil content reports are poor.
Market outlook
Matif rapeseed again traded higher as additional disappointing yields threaten to lower production ideas below the 18 million MT mark. The Ukraine is about10% harvested, and here too early yield reports are disappointing. Soybeans and sunflower seeds still seem to have good potential, but rapeseed above €500/MT seems an easy call. Rapeseed oil is a bit slow to react with fob Dutch mill quoted around €1,040.
Action
While European rapeseed crops are lower and we see better oil share in the crush, we see no reason to chase canola sales at present.
Canola – Topics of Interest
StatsCan – April Canola Crush
According to StatsCan, another big 920k MT of canola was crushed during the month of April, for a year-to-date total of 8.3 million MT, a 10% improvement on last year’s crush.
Annualizing the YTD crush to the full crop year would give us 11.06 million MT, which would be the biggest annual Cdn. canola crush to date.
