Canadian canola appears to face export hurdles at every turn while American soybean exports are posting records.
Canola exports year to date are almost the same as last year at this time. However, the Canadian National Railway engineers strike this week is impeding movement and the future of exports to China is uncertain over the blackleg issue.
Luckily, movement to the Asian giant was strong early in the crop year and the amount shipped so far is close to what analysts expected to go to China for the whole year.
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A key for the rest of the year will be whether other buyers step up to the plate. It is troubling to note that canola exports in the first week since the Chinese restrictions went into effect Nov. 15 were only 58,600 tonnes compared to 284,200 the week before.
The Canadian industry hopes prime minister Stephen Harper can break the impasse when he visits China this week.
Despite these problems, canola prices are well supported, riding on the shoulders of the soybean market.
Poor South American crops last crop year mean the United States has the soybean market virtually to itself, and it can barely move product fast enough. This sparked a soybean rally, even though the U.S. produced a record large crop.
U.S. export sales last week again topped traders’ expectations, with sales of 1.135 million tonnes, compared to expectations of 800,000 to 1.1 million.
That raises the total soybean export commitment for the year to slightly more than 27 million tonnes, compared to 17.2 million last year.
Of the total, China bought 18 million tonnes to meet its needs until March when the new South American crop will be harvested.
China’s soybean demand far outpaces its domestic crop so imports are unavoidable. However, imports were made more attractive because the Chinese government pays farmers more than the international price. At one point last year, imports were about $150 per tonne cheaper than domestic crop.
U.S. soybean prices will be further supported by the expected resumption of exports to the European Union. Movement stopped this fall when residue of an unapproved genetically modified corn variety was found in soybean shipments, causing them to break the EU zero tolerance policy. The European Commission approved the GM corn variety Nov. 30.
