Winnipeg, Sept. 21 – Canadian canola sales are moving slower than merchants’ had anticipated. Market watchers attribute the sluggish pace to high prices and low global demand.
“The export story right now is quiet,” said Peter Schutz, canola merchant at Richardson International Ltd.
He attributes it to a lack of demand and poor crush margins.
The crush margin for the nearby November contract works out to $38.73, as of Sept. 18, compared with $87.96 in the same time frame the year prior, according to ICE Futures Canada’s Canola Board Crush Margin.
Export interest has tapered off lately due to high prices, said Ken Ball, trader at PI Financial Corp.
Canola futures in the November contract closed at $468 per tonne on September 21.
“Buyers aren’t going to be eager to pay that price for canola,” Ball said. “It’s a little bit too expensive.”
Schutz said China has backed away from the market slightly, despite subsidy changes within the country.
China has taken away price support to canola-growing farmers, however those changes came after this year’s crops were planted.
That means heightened exports to China likely won’t occur until next year.
Adding to the presently-grim outlook for canola exports, Australian crop bureau, ABARES, has bumped up its estimates for the country’s export pace and reduced its forecast for Canada.
The agency expects Australian exports to increase by 143,000 tonnes to 2.32 million tonnes — though that number is still at a four-year low.
Agriculture Canada’s July forecast was for 7.6 million tonnes of exports, compared with 9.2 million the year prior.
Schutz said there is a chance Australia could meet needs price-wise that Canada can’t, but only if the country’s crop makes it through El Nino’s final stages.
