Canola Market Outlook: October 21, 2024
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Soybeans Chicago soybeans were down heavily on the week as the US harvest advanced rapidly to 67% complete and some rains were reported in Brazil.
The further decline in Chinese hog numbers is a reminder that the world’s largest buyer of soybeans might be in contraction mode. The USDA projected US exports up 9% from last years, but so far, sales are running in line with last years. If the US sales pace does not increase, then ~155 mln bu could be added US ending stocks.
Soybeans lack bullish views while China demand slows, and some rain is reported in South America. On the bull side are the strong oil prices.
Canola: YTD total canola disappearance into week 10 of the crop year amounts to 4.6 million MT compared to 2.7 million MT last year and is up 67% on last year.
Matif rapeseed values above €500/mt make Canadian canola quite competitive in Europe.
Conditions look good for renewed Cdn. canola exports on to the EU, and we also expect the Chinese market to remain open for Cdn. canola in the foreseeable future.
We see no reason to sell additional canola at this time.
Oilseed Market Backdrop
Soybeans
Current market situation
Chicago soybeans were down heavily on the week as the US harvest advanced rapidly to 67% complete and some rains were reported in Brazil. CBOT soybeans posted losses of 7 ¾ to 18 ¾ cents across the board on Friday and closed near the lows of the session. November lost 35 ½ cents over the week (-3.53%). Soybean meal futures were down 10c to $2.50/ton on the day. Soybean oil contracts dropped 54 to 77 points to close out the session.
US soybean sales at 1.7 mln mt were within trade guesses of 1 – 2.2 mln mt.
Product markets saw subdued meal markets, but still strong vegetable oils.
The further decline in Chinese hog numbers is a reminder that the world’s largest buyer of soybeans might be in contraction mode. The USDA projected US exports up 9% from last years, but so far, sales are running in line with last years. If the US sales pace does not increase, then ~155 mln bu could be added US ending stocks.
Market outlook
Soybeans lack bullish views while China demand slows, and some rain is reported in South America. On the bull side are the strong oil prices.
Canola Market
Canola usage
In week 10 of the crop year, growers delivered 500 thousand MT of canola into primary elevators, exports were a good 385 thousand MT, while domestic disappearance amounted to 244 thousand MT.
YTD total canola disappearance into week 10 of the crop year amounts to 4.6 million MT compared to 2.7 million MT last year and is up 67% on last year.
Visible stocks settled at an increased 1.63 million MT, with 976 thousand MT in primary elevators, 203 thousand MT in process elevators, 252 thousand MT in Vancouver/ Prince Rupert, and 200 thousand MT in eastern ports.
Current market situation
Several factors have lent support to canola values. The wet/ difficult French sunflower seed harvest, disappointing sunflower seed yields in the rest of Europe, slow vegoil imports, and a weak Euro all combined to support Matif rapeseed and to get Matif futures back over the €500/mt mark. This level makes Canadian canola quite competitive in Europe.
Canadian canola rebounded off the C$600 and has settled above $615/mt for now. CBOT soybean oil and Malaysian palm oil were up/ supportive this Monday, and crude oil rose another US$1 per barrel due to tensions between Israel and Iran.
Pertaining to China, demand for canola has been excellent, and we continue to doubt that Chinese crushers would accept any restrictions to Canadian canola while their plants are running at the maximum capacity.
Market outlook
Conditions look good for renewed Cdn. canola exports on to the EU, and we also expect the Chinese market to remain open for Cdn. canola in the foreseeable future.
Action
We see no reason to sell additional canola at this time.
Canola – Topics of Interest
Australian canola:
According to the Grain Industry Association of Western Australia (GIWA), W Australia is forecast to produce 17.78 million mt of winter crop from the harvest now under way. This is up from 16.9 mln mt forecast in their September report. Most of the improvement will be in wheat, and canola crops will benefit “a little” from the late rain in the central and southern higher-rainfall regions, which is reflected in an increase in tonnage estimates in the September report.
Per ABARES, total 2024 Australian canola production is expected to come in at 5.5 mln mt, down 8% from the previous year.
