Brenda Tjaden Lepp doesn’t see much upside in oilseed prices, at least in the short-term.
Canola will be flat for the foreseeable future and flax prices are likely heading down.
She thinks growers should jump if the old crop canola bids that were available over the holiday season resurface.
“I would not turn my nose up at $10 if you’ve got more inventory than you’re comfortable with,” Tjaden Lepp, chief analyst of FarmLink Marketing Solutions, told growers attending CropSphere 2015.
She expects prices won’t rise above that level for the next six to eight weeks.
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“I don’t think we’ll see the pace of farmer selling slow down enough to support the prices in the next little while,” she said.
The situation could improve by spring or summer, depending on Chinese purchases.
FarmLink is forecasting 1.7 million tonnes of canola ending stocks, which would be 100,000 tonnes above average but well below last year’s 2.4 million tonnes.
Other analysts have forecast 1.3 to 2.3 million tonnes. The big wild card is the export number.
FarmLink has penciled in 8.6 million tonnes of exports but that could increase by as much as 400,000 tonnes if China starts buying again. Sales to China tailed off in recent weeks because of dismal crush margins in that country.
“If Chinese demand picks up, then (carryout) could tighten and we could see (prices) run higher,” she said.
That’s why she’s advising growers who don’t need to clear bin space to hold off on marketing the crop or risk leaving money on the table.
“I’m not a seller of canola in the next three months or so. I think we want to just give this market some time.”
One bearish factor for prices is FarmLink’s forecast of 21.5 million canola acres in 2015. Other analysts are at 19.5 million acres or lower.
Tjaden Lepp thinks there will be “a massive shift” out of disease-prone crops such as pulses and cereals into easier crops to grow such as soybeans and canola. Growers are tired of attempting to sell quality-damaged crop from last year’s harvest.
Flax will be another popular choice. Tjaden Lepp’s seed industry contacts are telling her flax seed has been “flying off the shelves.”
“That’s a real bearish threat on the flax S&D (supply and demand chart),” she said.
“Let’s just say it’s pretty oversupplied.”
Production could be as much as 40 percent higher than last year based on her preliminary acreage estimate. Ending stocks for 2015-16 are forecast at 250,000 tonnes, which would be two to three times average.
Tjaden Lepp is surprised there are still $13 per bushel flax bids around, given the acreage outlook and the large crop that growers produced in Kazakhstan last year. She knows of one major U.S. buyer that brought in a shipment from Kazakhstan.
One grower in attendance used his phone during her presentation to sell his remaining flax at $13.
