Any upward bump from the long-awaited Statistics Canada report on projected plantings never really materialized after it was released April 27. It can be argued any benefit from the report came the day before, when the May canola contract finished at $894.40 per tonne after poking its head above $900 a tonne for the first time.
Old-crop July and the immediate new-crop months of November and January also moved higher the day before the federal agency’s report. After that, trade became chaotic, highlighted by wild swings as prices were down one moment, then on the plus side a little later, then continuing to bounce up and down.
Most trade expectations ahead of StatsCan’s acreage report came in above the 21.5 million acres it forecast. However, there are notions in the market that allude to the agency understating canola acres to be planted this spring, that more could ended up being sown. That remains to be seen, as seeding pace will begin to pick up and as farmers have pretty much made up their minds.
There are also concerns in the market that those 21.5 million acres won’t be enough to rectify the ongoing issue with tight canola supplies. Some in the trade pegged 23 million as the minimum to generate enough of the Canadian oilseed to satisfy foreign and domestic demand.
Adding to the situation are dry conditions across the Prairies. With topsoil parched and subsoil lacking sufficient reserves, producers will need to bank on timely rains to see them through to harvest. Should dryness prevail throughout the growing period, hoped-for yields could easily be dashed, further reducing production. That would pose a serious challenge to supplies.
Just as the May contract had a peak close of $901.90/tonne on April 27, the July contract could accelerate its climb and perhaps venture into $900 territory — especially when the commercials need canola to fill their orders.
New-crop canola should ascend as well in the coming months, especially if production doesn’t pan out too well. The November contract has sniffed the $700 mark, with January not far behind.
While there may not be enough canola to go around, those farmers who have it will certainly benefit from the good prices.