Spring planting has caught up with canola futures on the Intercontinental Exchange. For several weeks canola pushed upward, even as rain across the Prairies replenished depleted soil moisture levels, but now optimism for good crops has put pressure on values.
Planting was delayed and as much as 40 per cent of this year’s canola is set to be planted in June, but a turn of warm weather should see the crop grow quickly amid improved moisture conditions.
While seeding is somewhat behind the five-year average, current progress and better prospects for the crop have pressured prices.
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During the week ended May 30, the July contract gave up $11.80 to settle at $660.20 per tonne, while the November contract lost $10.30 at $683.20/tonne.
It will be interesting to see how low canola will go before it reaches support. There’s a belief that the market is rangebound, at least until the United States Department of Agriculture releases its next supply and demand report on June 12.
At that time, there should be a clearer picture of the number of soybean and corn acres seeded in the U.S. and whether there’s been a shift to soybeans due to rain. More soybeans than initially projected would likely weigh on canola values.
One thing that continues to stymie canola is its exports. With about two months left in the 2023-24 crop year, exports were a shade below 5.3 million tonnes, according to the Canadian Grain Commission. That’s nearly 1.9 million tonnes less than canola exports at this time last year.
Any notion of reaching the projected seven million tonnes has been thoroughly eradicated and a mark of six million tonnes is now eyed.
It’s abundantly clear that the old crop is running out. The CGC put exports for Week 42 at 105,800 tonnes, which fell to a mere 83,600 tonnes in Week 43. In the meantime, domestic use continued to be ahead of last year at 9.24 million tonnes compared to 8.49 million. That’s the brightest spot in an otherwise OK marketing year for canola.
