Canola prices fell on data on increased acreage in Canada

Source:  GrainTrade
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According to the Statistics Canada (StatCan) report released yesterday, in 2023 the planted area in the country increased by 3.2% compared to the previous year from 21.4 to 22.1 million acres, while traders estimated it at 21.8 million acres.

The expansion of planting areas is due to high canola prices during the last two seasons. But analysts say that due to dry and cold weather at planting time, the total canola crop may remain at last year’s level, even with increased rainfall intensity recently.

November canola futures on the Winnipeg exchange fell 1.9% to CAD 701/t, or $528/t yesterday, after losing 2.7% for the week, although they were up 7.7% for the month. Last year, canola prices reached CAD 860/t against the backdrop of a shortage of old-crop supplies and a sharp increase in the price of all types of oilseeds.

August rapeseed futures on the Paris exchange also fell 0.9% to €430.25/t or $468.7/t yesterday, losing 8% for the week but adding 6.8% to the price for the month.

The premium for November futures on Canadian canola rose compared to European rapeseed futures to $60/t. To enter the EU market, canola should be 30-50 $/t cheaper than rapeseed. Therefore, in the current season, European processors will continue to actively buy cheap rapeseed from Ukraine and will monitor the weather in Australia, where a decrease in the canola harvest is expected.

In FY 2022/23 (as of June 16), the EU increased rapeseed imports compared to the same period of the previous season by 38% to 7.24 million tons, of which 48.6% or 3.57 million tons were supplied from Australia, 40 .9% or 2.96 million tons – from Ukraine, 3.2% or 230 thousand tons – from Canada (compared to 611 thousand tons last year).

According to the USDA forecast, in 2023/24, the EU will reduce rapeseed imports to 5.1 million tons against the background of an increase in its own production. If Ukraine can supply 3.2-3.5 million tons of rapeseed, then it will be necessary to import only 2 million tons from Australia, which will be quite realistic even in case of a decrease in the harvest.

Canada’s canola growing regions received 10-150mm of rain, which will improve crop conditions, so traders are paying more attention to the weather in Australia.

In Ukraine, rapeseed purchase prices remain at a low level of 330-340 $/t for deliveries to the Danube ports, while for deliveries to the Baltic States or the ports of Poland and Romania, they have decreased by 15-20 €/t to 380-390 €/t.

Ukrainian farmers will be able to sell rapeseed at market prices only if the Black Sea ports are unblocked, but for this the Ukrainian Armed Forces must free the left-bank part of Kherson Oblast and reach the border with Crimea.

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