Canola Market Outlook: June 3, 2024
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Oilseeds: the soya markets were sharply down
The USA planting of soybeans is almost 90 percent planted
The premium of soya to corn has narrowed but in our view needs to do more
Canola: The YTD canola usage is 14.5 mln tonnes. Exports of seed are 1.2mln tonnes lower than the previous year
In some areas of Canada seeding is slow
EU rapeseed is firm due to very slow planting and high diesel prices. We have seen some canola exports to the EU
Canada exports of seed in week 43 were very low at 83,000 tonnes
Oilseed Market Backdrop
Soybeans
Current market situation
Beans dropped a substantial 43c and meal followed with a $21/tonne drop allowing oil share to find support to take bean oil up 57 points ($13/tonne). Soybean plantings are progressing well at 68 complete and the area under drought is down to levels to set up a good start. New crop sales are still below 1.0 mln tonnes and are down 66% against last season. Holidays disrupted activity on South America and Argentines put harvest progress at 86% complete, they left their production unchanged at 50.5 mln tonnes against the USDA's 50 mln tonnes. The total Brazilian harvest is 98% complete with the rain delayed Southern Rio Grande state the last main state to finish its campaign. Chinese buyers were absent and premiums in China were lower.
Market outlook
The lack of sales and the favourable early growing conditions make beans look weighty, and the declines reduced any of the momentum out of the charts. We expect the soya premium to corn to narrow further.
Canola Market
Canola usage
In week 43 growers delivered 276,000 tonnes the exports were a poor 84,000 tonnes whilst domestic usage was said to be 203,000 tonnes. Visible stocks were a tad below 1 mln tonnes. Canola exports of seed prices were not competitive as Canadian exporters protect their crush margins. We expect seed exports to be 6.5 mln tonnes 2/3 mln tonnes lower than recent exports. LDC at Yorkton crush bids was lower.
Current market situation
We continue to believe we remain in a weather market and would wait longer before making any new crop commitments. Weather in Europe continues to be poor for planting and this market could rally further
Market outlook
Action
We would leave canola alone while there are problems in the EU.
Canola – Topics of Interest
Global vegetable oil production outlook:
According to USDA, the ‘24/25 global vegetable oil production will amount to 228.3 million mt. If correct, this would be a 4.5 million mt higher than production in ‘23/24. This would more than cover the demand projection of 224.9 million mt.
Within the vegetable oils, palm oil is set to remain the world's most important vegetable oil in terms of manufacture and consumption, with global output estimated at 80 million mt, a 715,000 mt increase over ‘23/24. Palm oil accounts for just over 35 per cent of total global vegetable oil production. Indonesia remains the largest producer with an output of 47.5 million mt, followed by Malaysia with 19 million mt and Thailand with just less than 3.4 million mt.
The production of soybean oil is expected to grow just less than 3 million mt to 65.4 million mt in the coming crop year and could hit a new record. China remains the primary producer with production amounting to 18.5 million mt based on large seed imports. The US ranks second with 12.9 million mt.
The production of rapeseed oil is expected to reach 34 million mt in 2024/25, slightly less than in ‘23/24. By contrast, production of sunflower seed oil is seen to drop around 103,000 tonnes to 21.7 million mt in 2024/25. This estimate reflects production declines in Argentina and Ukraine. The expected increase in sunflower oil production in the EU-27 is unlikely to offset these decreases.
