It’s two months into the 2024-25 marketing year and Canadian canola exports are running well ahead of the year-ago pace, but labour disputes on both coasts and the threat of a trade dispute with China could throw a wrench in movement.
Exports so far: Canola exports as of Sept. 22 (1.676 million tonnes) were up by 240 per cent from the same time a year ago. Some traders expect more Chinese business in the months ahead as end users there look to shore up supplies in case of possible disruption stemming from China’s anti-dumping investigation.
Stocks: Canola ending stocks are forecast to dip to 2.5 million tonnes by the close of the 2024-25 marketing year, from just over three million as of July 31, according to the latest predictions from Agriculture and Agri-Food Canada. The department expects total canola exports of 7.5 million tonnes this marketing year, with a domestic crush nearing a record 11.5 million tonnes.
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However, the department cautioned that its forecast was dependent on additional crush capacity, now under construction, coming online. The impact of China’s investigation is also unknown. Other factors to watch include the harvest pace, fall weather forecasts, farmer delivery pace and end-user buying.
Farmer deliveries: Rain delays were reported in parts of the Prairies, but relatively warm conditions have generally allowed good harvest progress across Western Canada. Farmers delivered 2.6 million tonnes of canola into the commercial pipeline as of Sept. 22, up by about 600,000 tonnes from the same point a year ago. Visible supplies, at 1.4 million tonnes, compare with 1.1 million tonnes last year.
Cash bids: A bounce off contract lows in the futures market lent some strength to the canola cash market during the week ended Sept. 27, but the active flow of canola into commercial hands limited the upside. Basis levels remained wide at about $30-$60 per tonne, below the futures, depending on location.
Charts: Canola showed signs of turning higher before running back into resistance. With uncertainty on the export front and harvest pressure underway, a sideways pattern looks most likely in the short term.
