Canola Market Outlook: September 16, 2024
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Soybeans: The CBOT soy complex was little changed ahead of the USDA and that's how it ended the week.
There were fresh sales to China and USDA trimmed 10 myn bushels off US bean stocks which should be bullish, but markets ran into technical selling Friday
The corn-soybean spread may yet go narrower.
Canola: YTD total canola disappearance into week 5 of the crop year amounts to 2.2 million MT compared to 1.4 million MT last year and is up 61% on last year.
SK Ag put the percentage of canola combined in SK at 28% as of Sept. 9th, with another 24% sitting in swaths. AB Ag showed 21% of canola harvested (Sept. 10th), and lowered their estimated canola yields by another 0.4 bu/ac to 32.8 bu/acre.
Lots of crosswinds in this oilseed market as well. The threat of lost business to China still looms over the market. However, we feel that canola is well priced against soybeans, and will buy business, and and crushers are still making good margins.
The carryover looks heavy, but we would hold sales for now.
Oilseed Market Backdrop
Soybeans
Current market situation
The CBOT soy complex was little changed ahead of the USDA report, and that's how it ended the week. CBOT soybean futures could not hold on to early morning strength on Friday, closing 1 ¾ to 5 cents lower across the board. November closed out the week with just a 1 ¼ cent gain. Soybeans got pressured by products on Friday. Soybean meal futures were down 30 cents to $1.10/ton, with back months steady to $1.20 higher. Soybean oil futures were down 63 to 84 points on the day.
In the USDA report, there were no changes to the Chinese supply and demand, and the USDA import number remains at a roughly 10million MT spread to Chinese customs numbers. Growth in ‘24/25 domestic usage will be the main source of debate for the season ahead.
In the markets, the US posted fresh sales to China and in their report, USDA lowered US soybean stocks by 10 million bushels. This should be bullish news, but markets ran into technical selling on Friday.
Brazil was firm due to hot conditions, dry soils and likely planting delays.
We took off our corn long short soybeans for a nice profit to the bank. This spread may yet go narrower.
Market outlook
We have support by dryness in central USA and South American planting concerns. Against that, 0ther considerations include the impending US harvest, low river levels and uncertain Chinese demand.
Canola Market
Canola usage
In week 5 of the crop year, growers delivered 308 thousand MT of canola into primary elevators, exports were at 132 thousand MT, while domestic disappearance amounted to 169 thousand MT.
YTD total canola disappearance into week 5 of the crop year amounts to 2.2 million MT compared to 1.4 million MT last year and is up 61% on last year.
Visible stocks settled at 1.38 million MT, with 666k MT in primary elevators, 169 thousand MT in process elevators, 317 thousand MT in Vancouver/ Prince Rupert, and 228 thousand MT in eastern ports.
Current market situation
SK Ag put the percentage of canola combined in SK at 28% as of Sept. 9th, with another 24% sitting in swaths. AB Ag showed 21% of canola harvested (Sept. 10th), and lowered their estimated canola yields by another 0.4 bu/ac to 32.8 bu/acre. The Aug. 28 StatsCan yield forecasts for SK and AB were a significantly higher 39 and 39.9 bu/ acre, respectively.
However, we also received the model-based Statistics Canada (STC) production estimates this morning and note that Statistics Canada lowered their production numbers to 18.9 million MT (19.5 million MT earlier) for canola, and flaxseed production to 265k MT (300k MT earlier). The difference in canola production between the two STC reports is -521k MT.
With the big canola deliveries in week 5, we have changed our balance sheet a little and increased the ‘23/24 production estimate by about 300k MT to 19.255 million MT. This increases the carry-in to ‘24/25 to 3.1 million MT (from 2.8 million MT previously).
The canola market is still suffering from the threat of lost business to China. However, we feel that canola is well priced against soybeans, and we would hold off selling for now.
Asian markets ended lower except for rapeseed oil, which closed at 3-month highs. In Europe, Matif hit a 3-week low despite the USDA taking the EU and Ukrainian rapeseed and sunflower seed crops to a combined 6.5 million tonnes (-13%) below last year’s.
ICE canola remains choppy, and Nov. closed up $22.90/MT this Monday. It seems that the lower STC production number caught some attention.
Market outlook
Lots of crosswinds in this oilseed market as well. The threat of lost business to China still looms over the market. However, we feel that canola is well priced against soybeans, and will buy business, and crushers are still making good margins.
Action
The carryover looks heavy, but we would hold sales for now.
Canola – Topics of Interest
Statistics Canada - Sept. 16 Model-Based Production Estimates
The table below lists the model-based STC production estimates for the major crops for the years 2021 to 2024. It also shows the difference in production estimates to the STC Aug. 28 report. STC dropped their production estimate by a total of 425k MT, but canola and flaxseed show the biggest drop for a combined 556k MT.
