Canola Market Outlook: September 6, 2022
Weekly canola market outlook provided by Marlene Boersch of Mercantile Consulting Venture Inc.
Key Points for the Week
Weather for harvesting soybeans in the US is excellent.
Markets are still reacting to comments that next year’s South American harvest will be a record harvest. Soybean and canola markets opened lower. Losses so far are limited to 20 cents. Soymeal futures are trading $8.10 to $12/ton lower through midday.
Planting in Brazil is just beginning.
The US dollar hit a 20-year high and markets remain concerned about inflation and a potential recession.
There were rumours of 1 MT of canola trading to China. We think some canola did trade but the maximum was 250,000 tonnes.
China bought over 2 MT of US soybeans in August. September started with a registration of 400,000 tonnes (registered on September 1).
Brazil shipped 6.16 MT of beans in August. That was down from 6.48 MT during the same month last year.
The canola harvest in Canada will be in full swing in 10 days.
The Australian rapeseed harvest is expected to be 6.8 MT.
Oilseed Market Backdrop
Soybeans
Current market situation:
The markets are still studying the effects of Russia stopping gas exports to Europe. We think this means a further increase in fertilizer prices.
Soybean futures remain volatile.
Rapeseed and rice production in China was hit hard due to drought, suggesting high soybean imports.
Crush margins are at record highs.
US analysis groups are recommending soybean growers to be 50 percent sold.
Market outlook:
Traders don’t want to be long when financials are questionable, and recession is talked about in the markets.
Chinese demand, as usual, is the key factor in prices.
Canola exports need to increase significantly.
Oil demand in China is a key factor following their rapeseed drought.
Canola Market
We hear that the railcars for grain are in short supply as the railways chase higher returns for short haul coal traffic. This is negative for global warming; however, railways will inevitably chase higher profits.
Canola crush margins remain excellent as crushers widen their margins.
Canola is currently undervalued compared to soybeans.
Current market situation:
Canola crushers are making excellent margins.
Grower deliveries will increase as new crop harvest is in full swing in 10 days.
Export sales of seed need to increase.
We need more seed export sales to China in particular.
