It was a topsy turvy week for canola on the Intercontinental Exchange, with prices down one day and up the next. Despite those swings, the November contract never came close to exceeding the $600 per tonne mark for the week ending Aug. 23. That said, the oilseed also didn’t fall through its support level of $550.
After a chaotic week, the November contract incurred a net loss of $12.30/tonne, while the January contract gave up $10.30.
Movement over the past week in canola was largely dictated by shifts in other vegetable oils, and in the Chicago soy complex in particular. The United States is facing a good-sized soybean harvest, which is soon to begin.
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This year’s Pro Farmer crop tour through the U.S. Midwest found soybean pod counts to be mostly above those of last year and higher than the three-year averages. Those counts in numerous three-by-three-foot squares along both legs of the tour may not have reached the higher projections expected by some, but the U.S. is in line for a pretty good harvest.
That will be something to pressure Chicago soybeans downward, with spillover making its way into ICE canola futures. That alone could mean the days of $600/tonne may very well be over.
While canola data in the August report from Agriculture and Agri-Food Canada wasn’t earth shattering, there was enough to add its weight to the oilseed’s equation. Exports for 2024/25 were raised 500,000 tonnes to 7.500 million, and domestic usage nudged up 20,000 tonnes to 11.398 million. That increased ending stocks by 130,000 tonnes at 2.230 million.
One oddity stuck out in the AAFC report — canola’s feed waste and dockage for 2023/24 being all of 74,000 tonnes. That’s a huge drop from 692,000 tonnes in 2022/23 and AAFC projected 347,000 tonnes in 2024/25. A trader suggested the lower than usual number could signal there’s more canola to be had.
Come Aug. 28, there will be some indication of the size of the 2024/25 canola crop when Statistics Canada releases its principal field crop report. It’s unlikely this year’s harvest will be less than 18 million tonnes, but there’s a feeling in the trade that anything over 20 million tonnes is out of the question. The heat wave that struck just as canola was blooming may have been the catalyst to pull production below that mark.
However, there’s a catch. Few in the trade have confidence in StatCan’s use of a model-based report. Estimating output of canola and other crops using satellite imagery has yet to be embraced by several, and their skepticism is deep rooted. In the end, it might not matter what StatCan estimates canola to be. Rather, the trade is likely to cast its eyes to the agency’s surveyed report in December.
