Despite two reports over the last 10 days, there hasn’t been anything significant enough to shake canola from being range-bound.
As the markets waited with breath held for the latest supply-and-demand report from the United States Department of Agriculture (USDA) released August 12, there was speculation the report would have a strong spillover effect on canola. In the end, the bearish August edition of the World Agricultural Supply and Demand Estimates (WASDE) briefly pushed canola down as the soybeans dropped. On that Monday, canola lost $1.70 per tonne and then $3.50 the following day.
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That was the extent of it. All of the speculation of what might have happened flittered away as things resorted to being range-bound.
Other than around Winnipeg and a few other spots in southern Manitoba, the canola harvest has yet to begin in any major way. Yields remain unknown, outside of trade predictions. All that is certain has been fewer planted acres for 2019 compared to last year, meaning less production.
Then it was the August production estimates from Agriculture and Agri-Food Canada (AAFC) which didn’t even register as a hiccup on the markets. Released August 21, the report kept the AAFC’s July estimate of 18.575 million tonnes of canola this year, a little more than nine per cent lower than last year’s bountiful harvest.
In terms of canola, it may very well be a third report that will garner the market’s attention. On August 28, Statistics Canada will issue its survey-based production estimates, which should give a clearer picture of what’s to come this year.
Trade expectations have been above and below the AAFC’s forecast. For example, MarketsFarm analyst Mike Jubinville predicted 19.600 million tonnes, while colleague Bruce Burnett projected 18.025 million.
There is a wild card in all of this – frost. With this year’s crop getting off to a slow start and we’re now approaching the end of August, frost has become a looming threat. Should canola incur severe frost damage, it won’t matter which report said what. Everything will be tossed as the damage is assessed and new estimates are made. — With files from Marlo Glass, MarketsFarm
