Analyst thinks production was 19.7 million tonnes, which is below Statistics Canada’s 21 million tonne number
Statistics Canada’s canola production number is too high, and that means tighter carryout and decent prices, says a markets analyst.
Marlene Boersch, managing partner with Mercantile Consulting Venture, believes growers produced 19.7 million tonnes of the oilseed, which is below Statistics Canada’s 21.3 million tonne estimate.
She believes that will result in 1.5 million tonnes of carryout. Agriculture Canada is forecasting two million tonnes.
“I think farmers should still target $11 to $11.50 per bushel for their canola,” said Boersch.
The wild card will be demand out of China. Canola crush margins in China have turned negative in recent weeks, partly because of the appreciation of the Canadian dollar.
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If the Canadian dollar remains at or above US80 cents, that could curb Chinese demand because crushers typically want to see margins of at least $30 per tonne before stocking up on canola supplies.
She is forecasting a four million tonne export program to China in 2017-18, down slightly from 4.25 million tonnes the previous year.
Total exports are forecast at 10.5 million tonnes and another nine million tonnes will be crushed in Canada.
“I still think we could see some tightness later on in the year if we can keep the export pace roughly at what we’ve had year-to-date,” Boersch told farmers attending CropSphere 2018.
She expects canola acres will be up next year because the crop is expected to generate the second best margin per acre in 2018-19 next to yellow mustard. As well, she is forecasting a 1.5 million-acre drop in pulse planting.
“In spite of the rotational challenges, we’ll continue to push the canola acres,” said Boersch.
That will lead to increased production in 2018-19, forcing carryout to rise to 2.6 million tonnes and bumping the stocks-to-use ratio up to 13 percent from eight percent in 2017-18.
Boersch was deeply concerned about the flax market outlook because of sluggish early season exports, but the situation has turned around nicely.
“We have been catching up over the winter months into China. That’s very, very good news. I was very, very worried about that,” she said.
Canada has lost market share in the European Union to big flax crops in Eastern Europe.
However, that has been offset by strong demand out of the United States, where growers produced 170,000 tonnes of the oilseed, down 23 percent from the previous year. That has created 50,000 tonnes of additional demand from that market.
She is forecasting total exports of 510,000 tonnes and 2017-18 carryout stocks of 153,000 tonnes, down from 209,000 tonnes the previous year.
