WINNIPEG – Statistics Canada’s acreage report provided something of a much needed bounce for canola bids.
Canola hit a record low on April 23, with the May contract at C$437.80 per tonne and the July contract at C$446.10 per tonne.
The primary reason for the huge drop was the price of soybeans on the Chicago Board of Trade, said Errol Anderson of ProMarket Communications in Calgary, Alta.
“Soybean fell apart. For the July contract there was support at US$9 per bushel, and when that broke, it went heave-ho. We went all of the way down to our next level of support,” Anderson said, noting soybeans lost 30 cents per bushel in a week.
The Principal Field Crop Area report, released by Statistics Canada on April 24, breathed some life into canola bids. The expectation of fewer canola acres being planted had a slight bullish effect on bids, Anderson said.
Bids on the Intercontinental Exchange gained C$1.30 to C$1.80 per tonne on Wednesday.
Statistics Canada projected 21.3 million acres to be planted in 2019, down from the 21.8 million acres planted in 2018. Also, it’s 345,000 acres below the five-year average by. Market estimates range 19.4 million to 22.5 million total planted acres.
As much as the report provided some relief, Anderson isn’t optimistic as soybeans prices won’t benefit that much from a trade deal between the United States and China.
“If there’s any sort of an agreement, it will be small potatoes. There’s no grand deal coming. The market has to come to that realization,” he commented.
While China will buy some products from the U.S. and soybeans should get a little bit of a bounce, the expected boon won’t materialize, he added. That would mean the anticipated spillover into canola won’t happen as well.
And there is Canada’s own issue with China, which accounts for 40 percent of canola exports. China has continued to honour previously signed contracts for canola, but there have not been any new sales this year.