Farmers in the northern part of the Prairies, struggling against wet, cold soils to seed their canola crops, might wonder why the oilseed’s futures appear to be not reacting to the late planting.
Conditions are such that the expected 22.4 million seeded canola acres might be scaled back. Also, delays and cool weather now could mean that more canola than normal will bloom in the hottest part of the summer, if we get a hot summer.
The weather might yet co-operate enough to remove crop worries, but at this point the picture does not bode well for strong production in a year when total supply will be affected by the smallest carry-in stocks in many years.
Read Also
One Beer Market Updates Day 3 – Lentils and beef
Day 3 of the One Beer Market Update at Ag in Motion 2025.
However, new crop November canola futures May 1 to May 29 slipped almost $12 a tonne or 2.4 percent. Probably almost no one in Canada is selling new crop canola at this point. Those who pre-sold some of their 2017 crop did so months ago when the price was stronger.
However, it is frustrating to watch a market sag when a potential production problem is emerging.
But canola markets do not act independently. Issues in the wider oilseed market and currency moves contribute to the weaker canola market.
Soybean futures from May 1 to the close on May 26 fell 2.9 percent and soy oil was down 0.9 percent.
In the same period, the Canadian dollar has rallied about US1.15 cents or about 1.6 percent. The stronger loonie puts downward pressure on canola.
The Canadian economy is starting to rebound, sparking talk that the Bank of Canada might have to raise interest rates this year. And the market’s hope for aggressive tax cutting and stimulus spending in the U.S., which lifted the American buck early this year, is bogged down with President Donald Trump’s political problems.
The strength of oilseed prices at the beginning of May was associated with American seeding prospects that were threatened. The last weekend of April saw a massive storm dump snow on Kansas and huge amounts of rain on the southern Midwest.
But since then, weather in the Midwest has improved and planting has caught up to the five-year average, although some crops had to be reseeded.
A record large soybean acreage is expected and there is excellent moisture in many parts of the Midwest.
The record large South American soybean harvest is still streaming onto the world market.
With such price-limiting news in the soybean market, it is hard to spark much of a rally in canola.
