Unless there is a surprise weather disaster somewhere in the world, we are looking at rapidly rebuilding world grain and oilseed stocks. 


That means prices could continue to fall from where they are today and canola won’t escape the downturn. 


Canada produced a record large crop, but sales are not posting records. Exports are running about 430,000 tonnes behind last year’s pace, and domestic crush is about 228,000 tonnes behind. 


Reduced shipments to Mexico, Japan and the United Arab Emirates appear to be the reason for the export slowdown, while exports to China and the United States are up slightly.


Agriculture Canada had already predicted in October that canola carryout stocks would more than double to 1.4 million tonnes from a tight 608,000 at the end of 2012-13. However, that number will be adjusted higher to account for Statistics Canada’s larger crop estimate this week.


Strong U.S. soybean exports and a modest rally in palm oil futures recently propped up the market.


However, Thomas Mielke, executive director of analytic firm Oil World, predicted last week that prices will fall if the record soybean seeded area in South America produces a record crop.


Mielke thinks soybean prices will likely drop to $11.50 a bushel by June from $13.25 early this week. 


New crop November 2014 soybean futures are already at that level — a 13 percent drop from the current January price. Applying that to canola futures would drop the price to about $425 per tonne.


Mielke thinks world soybean production may climb 7.3 percent from last season to a record 286.5 million tonnes.


Brazilian growers are in the home stretch of seeding their soybean crop, and Brazilian analysts are increasing their production forecasts, thanks to good moisture. Also, a huge spraying campaign appears to have checked the threat from an outbreak of a caterpillar that feeds on soybeans.


In all this price gloom, one oilseed analyst is more upbeat about the market, at least for the winter.


Dorab Mistry, who heads the vegetable oil trading arm at Indian conglomerate Godrej Industries, is probably the leading palm oil analyst.


Speaking at a meeting in Indonesia last week, he said leading palm producers Indonesia and Malaysia are expected to soon increase the mandated content of palm oil in biodiesel, while Brazil is also expected to increase the soy oil content in its biodiesel. 


Argentina already made such a move this week.


Mistry sees palm futures climbing 13 percent by March if these biodiesel mandates are revised to the maximums proposed. It would help offset the depressing effect of the large South American soybean crop.


However, he believes the support would soon fade as Indonesian production, which is currently lower than expected, revives later in 2014.


Mistry expects lower prices by June, but he also cautioned that the South American crop is many months from harvest and weather could always present problems.


However, Canadian growers can’t count on that, nor can they expect support from corn prices because stocks of that grain are also growing.


The weakening Canadian dollar might provide modest support. Several banks believe the loonie will fall against the U.S. dollar in 2014, which would increase the value of Canadian grain priced in loonies.


However, Canadian farmers should be thinking overall about ways to minimize their costs going into next year’s growing season.