Canola exports have been humdrum but don’t blame lack of international interest, says an exporter.
“Right now, we’re not really able to meet all the demand that’s there,” said Jarrett Beatty, trading manager with Parrish and Heimbecker.
Bulk shipments through week 29 of the 2017-18 crop year are 5.78 million tonnes, which is nearly identical to the 5.76 million tonnes exported during the same period in the previous crop year.
The problem with that is there is about one million more tonnes of supply this year, according to Agriculture Canada.
It forecasts an 11.5 million tonne export program in 2017-18, which would be about 500,000 tonnes more than the previous year.
Beatty said there is enough demand to move that amount. He noted that two large soybean crush facilities in China have been converted into canola processing plants.
Those two plants have created an additional one million tonnes of demand from China. That combined with China’s shrinking domestic production of the crop is creating intense competition for imported canola.
“We don’t really have enough seed to supply everybody so that they could crush year-round at this point,” he said.
So, the demand is there but the available supply is not.
“You can only export when we can buy it from the growers and canola has been in fairly tight hands,” said Beatty.
Many growers are holding out for $12 per bushel canola.
“Whether or not they get into spring time and have to readjust their targets or we actually have an opportunity to hit those numbers I think will be the telling component,” he said.
Beatty suspects the crop is not as big as the record 21.3 million tonnes that Statistics Canada estimates, which is one reason why growers are keeping a tight grip on supplies.
The other issue is poor rail service. If it does not improve, exports will fall, carryout will rise and prices will drop.
Jon Driedger, senior market analyst with FarmLink Marketing Solutions, said canola is moving out of Canada at the same pace as last year’s record program, so it’s not a complete disaster but he acknowledged there has been a slowdown.
After the first five months of the marketing campaign, exports were nearly 500,000 tonnes ahead of the previous year’s pace, according to Statistics Canada data. Now they are pretty much on par, according to Canadian Grain Commission data.
“It feels like a letdown,” said Driedger.
Beatty pointed out that the early season comparison is misleading because a dockage issue hampered Canada’s 2016-17 export program to China in the September-through-December period.
Driedger said there has been recent improvement in basis levels and prices have been firming up a bit, which has led to some farmer sales.
But other growers are holding out to see if the dryness in the prairie region continues through spring, which could cause exporter concern about new crop and buying of old crop.
“A lot of what is left is maybe going to stay in relatively strong hands certainly if it stays dry,” he said.