Mumbai, August 19 (Commoditiescontrol): As per the latest data from the Canadian Grain Commission and Statistics Canada, the canola market in Canada is currently experiencing a tight balance between supply and demand for the 2022-23 crop year.
Key Findings for 2022-23 Crop Year:
For the 2022-23 crop year, the total carry-out for canola is estimated at 1.75 million tonnes (Mt), calculated from commercial stocks data and an estimated farm stocks of 0.80 Mt, based on a weekly pre-harvest delivery pace of about 0.3 Mt per week. Total disappearance is estimated at 17.4 Mt, comprising a crush of 9.8 Mt and exports of 8.2 Mt.
The total supplies for 2022-23 are calculated to be 19.1 Mt, which consists of a production of 18.2 Mt, carry-in of 0.9 Mt, and imports of 0.1 Mt.
An imbalance has emerged between canola supplies and disappearance, reflected in a negative feed, waste, dockage (FWD), and error estimate of 0.66 Mt. This negative FWD suggests an underestimation of the carry-in and/or production for the crop year, with revised estimates expected in the upcoming release of Statistics Canada’s Supply and Disposition report.
The simple average price for No.1 track Vancouver canola has been recorded at $857 per tonne (t), compared to $1075/t for the 2021-22 period and a five-year average of $727/t.
Outlook for 2023-24 Crop Year:
For the 2023-24 season, canola seeded area in Canada is estimated to increase by 3% from last year, to 8.9 million hectares (Mha), implying a harvested area of 8.8 Mha.
Despite variable growing conditions across Western Canada, trend yields are assumed at 2.13 tonnes per hectare (t/ha), potentially resulting in a production of 18.8 Mt.
Conditions are mixed across the major growing regions. While Manitoba’s canola crop conditions range from fair to mostly good, Saskatchewan is grappling with dry conditions in its southern part. Alberta’s canola conditions were rated 42% good to excellent at the end of July.
For 2023-24, total canola supplies are forecast to increase by 8% year-on-year due to higher carry-in and a slight increase in production. Demand is expected to remain stable with domestic crush and exports forecast at 9.7 Mt and 9.0 Mt, respectively, fueled by strong global demand for vegetable oils and protein meals.
A notable development is the rapid expansion of the Canadian canola crush sector, with the possibility of new plants becoming operational during the winter or spring of 2024. This is expected to result in a 0.5 Mt to 1.0 Mt rise in domestic processing, potentially at the expense of exports.
Carry-out stocks for 2023-24 are forecast to decline slightly to 1.70 Mt. The simple average price for No. 1 track Vancouver canola is forecast at $790/t, versus the five-year average of $725/t.
Factors to Watch:
Analysts are keeping a close eye on several key factors that could influence the canola market:
North American harvest conditions
Canadian canola yields
Size of the US soybean crop
US soy oil and soymeal prices
Strength of world demand, including China
(By Commoditiescontrol Bureau: 09820130172)
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