One Thanksgiving, after what must have been a very filling dinner at my grandma’s apartment, a group of my cousins and I, all in town for the holiday, decided to see a movie (School of Rock, if you want to date this anecdote).
We never made it to the theatre because the elevator from the sixth-floor apartment got stuck on the way down to the lobby. It was a long weekend in a rural town, so the closest available elevator repairman was at least an hour’s drive away. The nine of us had a memorable evening entertaining ourselves while waiting for rescue.
There’s a cliché among traders that markets “take the escalator up and the elevator down,” meaning its easy for prices to drop, but it takes longer for them to rise.
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Canola — The oilseed has fallen so far and for so long that it was somewhat of an anomaly to see it finally showing signs of stabilizing toward the end February. Has the falling elevator finally reached the ground floor?
While another break lower is possible, May canola appears to have found solid nearby technical support at $580 per tonne. However, the doors have yet to open, and there’s a case to be made that prices may stabilize in a sideways pattern near contract lows until a catalyst materializes that would give the market a reason to start the slow climb higher.
Exports — Canola exports continue to lag the year-ago pace, with 3.37 million tonnes moved through 30 weeks of the crop year, well behind the 5.09 million tonnes reported at the same time in 2022-23, according to Canadian Grain Commission data.
While there was market chatter that fresh export demand was finally coming forward as prices hit their lowest levels since 2020, any such business has yet to show itself in the available data.
Deliveries — Canadian canola production of 18.4 million tonnes in 2023-24 was only 500,000 tonnes below the previous year, with available supplies of 19.9 million tonnes only off by 200,000 on the year due to a large carry-in. However, the softer prices mean farmers have also been more reluctant to make sales. Producer deliveries of 9.7 million tonnes through 30 weeks were down by 1.7 million tonnes from the same point the previous year.
As a result, even if export buying does pick up and canola trends higher, producer selling would likely also increase and keep a lid on the upside.
Domestic usage — Processors remain the lone bright spot in the canola market, with favourable crush margins keeping the domestic demand running at a solid clip. CGC data placed domestic disappearance through 30 weeks at 6.26 million tonnes, up by six per cent on the year. It’s maybe not enough to turn the market around, but at least the door is open a crack and some fresh air is getting in.
