A million tonnes of canola.
In Canada, that number represents 16 percent of the six-million-tonne crop farmers are harvesting this year. Not so long ago, a million tonnes would have been one-third of Canada’s canola crop.
But compared to the world vegetable oil crop – coconut oil, palm oil and, of course, soybean oil – a million more, or a million fewer, tonnes of Canadian canola is small potatoes.
Canada has produced back-to-back, record-breaking crops of canola. But on-farm stocks are the lowest they’ve been in 10 years, at 45,000 tonnes.
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Even now, at the height of harvest pressure, farmers are looking at prices close to $7 per bushel for that canola. What gives? In a word – demand.
“There’s incredible global demand surfacing,” says Greg Kostal, market analyst with United Grain Grower’s Grower Marketing Services in Winnipeg. “Asia is becoming a player and China has entered the market big time.”
India, typically an exporter of oilseeds, is buying this year.
All of that global demand is pushing futures prices higher at exchanges all over the world. On Sept. 12 September canola in Winnipeg sellted above $400 per tonne. Not a bad rally, considering summer lows were $335 per tonne.
Malaysian palm oil futures hit a nine-year high this past week, pushed by smaller yields at the bottom of their five-year cycle.
European rapeseed oil prices are following a smilar path, as plantings were reduced under the Blair House accord.
German rapeseed oil prices have gained about $40 per tonne. European rapeseed oil prices, quoted f.o.b. at North Sea ports, are up by as much as $178 per tonne compared to this time last year.
Kostal says even though the United States is going to pull off a bigger soybean crop this year, the hub of world vegoil demand this year is Europe. Analysts estimate European crushers need to buy as much as 25 million tonnes of oilseed – any oilseed – this year.
In Canada, as always, Kostal says the key to prices is the transportation system.
It doesn’t matter that we’ve got a million more tonnes of canola this year, he says. What does matter is whether we can get it to delivery position. Will there be enough cars allocated? How much canola won’t move because of the strike at Saskatchewan Wheat Pool?
Kostal isn’t answering those questions.
But he does say canola prices are in for some “monstrous” swings.
