MarketsFarm — Don’t expect any large increases in canola prices any time soon, according to Ken Ball of PI Financial in Winnipeg.
In fact, there’s a good chance seen that old-crop canola could fall below its support level of $800 per tonne.
Ball said 2022-23 canola ending stocks in Canada could increase because of the large crop to come off of Australian fields. He pointed to the March report from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) which projected this year’s harvest to come in at record 8.27 million tonnes.
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“Australia is going to export three times the canola they usually do. That’s going to erode our business going into spring,” he said.
Canadian canola carryout could end up being 1.5 million to two million tonnes, he said, because of a decline in projected exports of the oilseed. Presently, Agriculture and Agri-Food Canada (AAFC) has called for 2022-23 canola ending stocks of 800,000 tonnes.
Ball projected exports this marketing year to be about 7.5 million tonnes at best, compared to the 8.6 million expected by AAFC. However, either one would be a marked improvement over the 5.25 million tonnes in exports in 2021-22.
He added that Chicago soyoil isn’t likely to climb above 60 U.S. cents anytime soon. But he noted vegetable oils’ use for biofuel production is on the rise in a number of parts of the world, which would be supportive of prices.
“The big question is, will the [Chicago soymeal] peak and break? So far it’s staying pretty strong and that’s keeping the beans up,” he said.
Should those soyoil and soymeal values hold or pull back, canola will inevitably follow, Ball said.
Another major factor for canola in coming weeks has been the amount of farmer selling. The trader said there’s quite a bit of canola still in farmers’ bins which needs to move. After waiting through most of winter, they have become more eager to part with it as spring seeding approaches.
— Glen Hallick reports for MarketsFarm from Winnipeg.
