EDMONTON – Don’t panic about the price. That’s the message international oilseed analyst Thomas Mielke delivered to canola growers who watched prices slide through January.
Mielke, based in Hamburg, Germany, spoke twice to standing-room-only crowds at Edmonton’s FarmTech Jan. 28.
“The good news, you had two bumper crops in a row and you don’t have bumper stocks hanging around. That means the market is buying what you produce,” said the analyst who produces the publication Oil World.
Mielke said canola prices, unlike soybean markets, will stop falling as demand for the smaller, more efficiently crushed oilseed increases relative to beans.
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Mielke believes canola prices will have several opportunities to rise in the coming months and should be stronger than current prices for the longer term.
He said vegetable and mineral oil fundamentals aren’t being fully appreciated by futures traders.
The higher oil-to-meal ratio of canola versus soybeans bodes well for canola prices.
The world’s depressed livestock protein industry will not support the feed meal component of oilseeds.
“You have the right product for a marketplace that will pay to get it,” he said. “And China and your canola? Well, let’s just say they want to produce their own and despite trade limiting actions, they cannot. They have a need they cannot fill and this will pass soon,” he said.
In 1990, China exported vegetable oils and oilseeds. Today it is the planet’s largest importer, consuming 30 percent of world oil and fat supply.
The coming season’s oilseed price will be affected by a large South American oilseed crop, which Mielke believes might be overestimated.
Dryness in the Philippines palm oil region could play into prices as El Nino plays out in the Pacific.
Canadian canola represents 20 percent of world supply and due to its efficiency and food market profile, the price will find support quickly, said Mielke.
“The Ukraine’s (canola) crop was lower (than in 2008 or 2009), Argentina’s crop, if it isn’t marketed quickly, may not be there to provide relief to April-May markets and prices could rise. Be ready to sell,” he said.
Soybean’s large meal component and the large South American crop could pressure soybeans lower yet.
“There is more downside to the soybean market than the (Chicago futures market) has shown. Futures could be below $9 (US per bushel) and could approach $8,” he said.
He sees vegetable oil prices, delivered to Rotterdam, rising by $100 to $200 per tonne between January and September this year.
Soybeans will set the trend for oilseeds, but canola’s premium will widen.
Soybeans at that port may hit $380 US this year.
Soy meal pellets will likely fall by $100 to about $325 for 44 to 45 percent protein, Argentine product.
