The market is stumbling drunk with a bellyful of canola, but fortunately for farmers it’s passing through the west coast pipeline faster than usual.
Overseas demand “has been quite good responding to the market, and to new destinations too, which is even better,” said Lach Coburn of Cargill’s Vancouver export operations.
“We still have a lot of canola to move, but at least we’re not sitting in neutral.”
This year’s gigantic canola crop estimated by Statistics Canada to be 9.66 million tonnes may leave a record three million tonne carryover that could continue depressing prices into next crop year.
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But the more that can be sold through the winter, the less the downward pressure on prices. So far, canola is proving attractive to local and distant buyers.
To Dec. 11, canola seed exports were running 26 percent ahead of last year and the crush was up four percent over last year.
“We’re seeing some very positive signs in the market,” said Dave Hickling of the Canola Council of Canada.
“It’s going to be difficult to move it all, but we’re seeing some pretty promising signs of additional movement and new markets.”
Sales to the United States are on pace and could increase as people focus more on the dangers of trans fats. Mexico will probably import a record 1.1-1.2 million tonnes this year, up from 944,000 last year.
Japan is set to take 1.9 million tonnes and appears to be pleased with this year’s Canadian crop.
“When they look at the oil content, they can’t help but smile,” said Coburn.
The only real concern in quality-conscious Japan, Coburn said, is the high moisture content of the crop, which was hit by rain in September.
China is back in the market for canola, which is always good news for prices, because it can be a major buyer.
Pakistan, too, is buying again.
Hickling said China tends to buy when it has a short crop or is temporarily short of supply, and Pakistan tends to buy when the Australian crop is unavailable, so it is hard to estimate how much they will consume.
But he said China this year could take 400,000 to 500,000 tonnes, up from 275,000 last year and Pakistan 300,000 to 400,000 tonnes. Pakistan did not buy Canadian canola last year.
The most exciting news this year is the entrance of the United Arab Emirates as a canola buyer.
The Persian Gulf nation has already bought 43,000 tonnes of Canadian canola and may buy about 30,000 tonnes per month over the coming year, Hickling said.
A big new crushing plant in Dubai has been selling canola oil to Europe for biodiesel. Hickling said the plant can process 2,000 tonnes per day of canola or 4,000 tonnes per day of soybeans.
It has markets for both canola and soy oil, so it would likely become a steady customer, Hickling said.
Canadian crushers are also doing well, Hickling said. Their margins are strong and they will likely keep crushing canola as long as they can sell its products.
Coburn said canola movement off the West Coast has given 2005 a “nice upturn” for an ending. He hopes it continues after January.
