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Canada Canola Prices Seen Nearly Unchanged At $465-495 On Higher Carry-In, Rising Exports

23 May 2020 10:45 am
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Mumbai (Commodities Control) - Agriculture and Agri-Food Canada’s (AAFC) report forecasts Canola prices to be in range between $465-495/t for 2019-20, down from $497/t last year.

This flat-to-weak price outlook is estimated despite decrease in canola supplies to 22.6 million tonnes (Mt). Meanwhile sharply higher carry-in stocks was moderated by a sharp decline in production.

The total usage of canola is expected to reach a near record of 20 Mt due to expected crush of 9.8 Mt and exports of 9.6 Mt, the fourth highest on record. Canada’s canola crush pace is on a record setting pace on support from strong world vegetable oil demand, large domestic stocks and decent crush margins.

Meanwhile, the Canadian export pace picked up sharply in March and April on strong European and United Arab Emirate purchases.

AAFC notes that the COVID-19 pandemic appears to have had a minimal impact on canola demand and the consumption will likely remain unaffected by the disease for the remainder of the crop year. Carry-out stocks are expected to fall by 1.2 Mt to 2.6 Mt for 2019-20, the third highest level on record. The stocks-to-use ratio is estimated at 13% versus 20% for 2018-19 and the modern day record of 23% set in 2004-05.

However for 2020-21, AAFC forecasts, seeded area in Canada to decrease by 2% to 8.3 million hectares, as farmers shift into alternative crops away from oilseeds. Harvested area is forecast at 8.2 million hectares while yields are projected at 2.27 tonnes per hectare (t/ha), up marginally from 2019-20.

Exports are forecast to decline marginally to 9.5 Mt, in 2020-21, as a slow and steady growth in world consumption of vegetable oils is offset by a return to normal growing conditions for the European rapeseed crop.

Domestic crush is forecast to fall to 9.3 Mt, on competition from large world soybean oil and palm oil supplies and spillover from the collapse in world crude oil prices.

Carry-out stocks are forecast to tighten slightly to 2.3 Mt for a stocks-to-use ratio of 12% supporting a modest rise in canola prices to $480-520/t.

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