The evidence is in on how much the China canola dockage issue hurt exports of the oilseed.
Canada shipped only 80,000 tonnes of canola to China in September compared to 314,211 tonnes in the same month in 2015 and 280,539 in 2014, according to Statistics Canada September trade data released last week.
August shipments to China were also slow.
China imported only 273,163 tonnes of canola in August and September, down from 622,563 tonnes in the same period last year.
The slowness of shipments to China explains why total canola shipments are behind last year’s pace.
Remember, 2015-16 was a record year for canola exports, but because the supply of canola this year is similar to last year, analysts had expected that exports would be similar as well.
But based on the Statistics Canada export data for the two months, total shipments are down 9.5 percent.
That figure would have been worse had not exports to Pakistan and Mexico increased, partly making up for the gap in movement to China.
The Statistics Canada export data always trails about a month behind.
China and Canada worked out a resolution to the dockage issue on Sept. 22.
The Canadian Grain Commission keeps a weekly running tally on exports and it sheds light on how things progressed in October.
It shows that total movement in weeks 10 through 13 of the crop year ending Oct. 30 was just a tiny bit behind the pace compared to the year before, so things might be getting back to normal.
But the question is, can the weakness of the first two months be made up in the remaining 10 months of the crop year?
Luckily, there is another source of demand.
We’ve reported before, particularly in the daily market reports we have at Producer.com, that domestic crush is running well ahead of last year and setting new records.
Thanks to a strong crush profit margin, processors in the week ending Oct. 26 logged a blistering performance, crushing almost 200,000 tonnes, a record high for a single week.
For the year to Nov. 2, crushers have processed 2.29 million tonnes, meaning that this year for the first time ever domestic processors are accounting for a larger part of canola demand than exporters.
This, in part, explains the fact that producer deliveries are actually running ahead of last year, at 4.99 million tonnes, compared to 4.74 million last year.
I had expected that this year’s canola market — supply and demand — would unfold in a manner similar to 2015-16.
There have been some curveballs thrown at it, but it might yet prove true.
Domestic demand might make up for the shortfall in China’s buying at the beginning of the crop year.
And the unexpected, but most welcome warm, dry weather this month should allow western Canadian farmers to harvest what was stranded in the fields when snow and rain hit in early October.
As well, the canola price run up in October might have allowed producers to price a portion of their crop at profitable levels.