Glacier FarmMedia – There are simply too many bearish factors that continue to weigh on canola values, leaving the oilseed unable make any sort of turnaround in early May, according to Tony Tryhuk of RBC Dominion Securities in Winnipeg.
Canola futures on the Intercontinental Exchange took a hard hit on Apr. 30 that exacerbated its negative outlook, although the oilseed reclaimed about half its losses to start off May.
“This is three steps back and a half step forward,” quipped Tryhuk.
“Canola is trying to find value, trying to find the next set of inputs that’s going to dictate the next move one way or the other,” he added.
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As more farmers across the Canadian Prairies begin their spring planting, Tryhuk noted any crop development early on could be supportive.
“But after that, I don’t know,” he said, adding the canola export picture doesn’t look very good among Canada’s top three foreign customers.
“China is a quiet buyer this year. Japan is well off what they would normally buy and so is Mexico,” Tryhuk stated.
The most recent by country export data from the Canadian Grain Commission placed canola exports to China at 2.21 million tonnes for 2023/24, down from the 2.94 million a year ago. Japan’s purchases reached 552,000 tonnes, compared to 690,000 this time last year, and Mexico’s intake is far off at 279,900 tonnes versus 801,000.
To date, the CGC said year-to-date canola exports were nearly 4.55 million tonnes. With the marketing year set to end Jul. 31, there’s little chance of them reaching the seven million tonnes projected by Agriculture and Agri-Food Canada in its April supply and demand report.
“The carryouts are going to be big this year. That’s going to make it difficult for this market to penetrate that series of highs we had around that $660 [per tonne] level,” Tryhuk continued.
In that April S/D report, AAFC projected canola ending stocks for 2023/24 at two million tonnes, up from the previous year’s 1.51 million.
— Glen Hallick reports for MarketsFarm from Winnipeg.
