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Canada Canola 2020-21 Prices Seen Rising Up to $520 on Tight Ending Stocks, Lower Seeded Area Estimates

19 Jul 2020 8:09 pm
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Mumbai (Commodities Control) - For 2019-20, total usage of canola is expected to reach a near record 20.1 Mt based on an expected crush of 9.9 Mt and exports of 9.6 Mt.
Canada’s canola crush pace is on a record setting pace while exports accelerated on strong demand and expanded railcar capacity, with the COVID-19 having minimal impact on canola consumption.


In its June outlook report, Agriculture and Agri-Food Canada (AAFC) and Statistics Canada (STC) release an update on the 2019-20 crop year and upcoming 2020-21 crop year.


Carry-out stocks are expected to fall by 1.3 Mt to 2.5 Mt for 2019-20, the sixth highest level on record. The stocks-to-use ratio is estimated at 12% versus twenty% for 2018-19 and the modern day record of 23% set in 2004-05.
For 2019-20, Canola prices are estimated at $475-495/t versus $497/t last year.

For 2020-21, the seeded area in Canada is estimated by Statistics Canada to have fallen marginally to 8.4 million hectares (Mha), as farmers shift into wheat and coarse grains away from oilseeds. By province, Saskatchewan accounts for 55% of the canola seeded in Canada, followed by Alberta and Manitoba with 28% and 16%, respectively, of the total canola area in Canada.


The revisions to the seeded area estimates for canola versus those based on the seeding intentions survey are unusually small for the 2020-21 crop year.


AAFC forecasts a harvested area of 8.3 mln ha for canola, assuming a normal rate of crop abandonment.

Yields are projected at 2.27 tonnes per hectare (t/ha), up marginally from 2019-20, based on 5 year average yields. Despite a slightly later start than normal to field operations due to a cold spring, seeding of canola wrapped up in late May or early June for most regions of western Canada.

Moisture conditions are adequate to drier than-normal across most of the oilseed growing region and temperatures were significantly warmer than normal for June across western Canada.

Canola production is forecast to rise slightly to 18.9 Mt, while total supplies fall to 21.5 Mt on a sharp decline in carry-in stocks and expected slightly lower imports.


Exports are forecast to decline marginally to 9.5 Mt, partly as a function of tighter domestic supplies but also due to strong domestic crush and an expected weakening of demand, assuming European rapeseed production returns to normal following last year’s drought.


Domestic crush is forecast to fall to 9.6 Mt, on competition from large world soybean oil and

palm oil supplies. Carry-out stocks are forecast to tighten slightly to 2.3 Mt for a stocks-to-use ratio of 12% supporting a modest rise in canola prices to $480-520/t.



       
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