Agriculture Canada figures this country will be virtually sold out of canola by the end of 2012-13.
The department updated its supply and demand outlook last week and pegged year end canola stocks at only 450,000 tonnes.
That would be the lowest stocks since the carryover of 319,000 tonnes in 1998, but represents a tighter situation than it did back then when the stocks-to-use ratio fell to about five percent.
Carryout as a percentage of total use this year is expected to fall to three percent. In other words, we’ll be scraping the bottom of the barrel.
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The ratio was five percent last year and 16 percent in 2010-11.
Agriculture Canada forecasts a season average price of $630-$670 per tonne basis Vancouver. The Vancouver trackside price late last week was $647.
It expects producer deliveries will be heavily weighted to the first half of the crop year.
The futures market is encouraging delivery now.
In a normal autumn, prices in contract months later in the year are usually higher than the current contract. The difference is called the carry and represents a payment to farmers to hold grain on the farm until later in the year when elevators are not clogged with off-the-combine deliveries and demand is expected to be better.
This year we are experiencing an inverse canola market because current prices are higher than those in the deferred contracts.
One reason for the inverse is the expectation that South America will produce a record large soybean crop, with harvest beginning around February. Ending the inverse would require a production problem in South America but for now, moisture is generally good to adequate as farmers there seed their crops.
Agriculture Canada expects export and domestic markets to take less than they did last year when supply was greater.
Exports are expected to take the biggest hit, falling 17 percent to 7.2 million tonnes.
Domestic crush is expected to fall seven percent to 6.5 million tonnes despite increased crush capacity, most notably with the expansion of the Bunge crushing plant at Altona, Man., which is slated to be operational in the first quarter of 2013.
Feed, waste and dockage are expected to fall 76 percent to 61,000 tonnes.
Turning to other crops, Agriculture Canada expects that year-end stocks of durum and wheat will fall, with durum dropping to 1.1 million tonnes, the second lowest amount since 2000.
All wheat, excluding durum, is expected to fall to four million tonnes, also the second smallest amount since 2000.
Barley stocks by the end of 2012-13 are expected to edge higher to a slightly more comfortable 1.5 million tonnes from 1.22 million last year.
Oat stocks are expected to continue falling, to 775,000 tonnes from 817,000 last year.
Flax stocks are also expected to fall, to 100,000 tonnes from 141,000 last year and 194,000 two years ago.
Pea stocks are expected to fall to just 200,000 tonnes for a stocks-to-use ratio of only seven percent.
The lentil oversupply is expected to shrink a little with carryout stocks dipping to 650,000 tonnes, down from 788,000 tonnes. The stocks to use ratio would fall to 42 percent from 52 percent last crop year.
Mustard stocks are expected to fall to 60,000 tonnes for a stocks-to-use ratio of 39 percent.
Canaryseed supply is expected to almost disappear, dropping to just 5,000 tonnes for a stocks-to-use ratio of four percent.
