Canola market in a tight trading range

By BARRY COLEMAN, Northern Canola Growers Association

Canola prices are reported to be in a relatively tight up and down trading range that hinges on soybean oil price movements as well as European rapeseed markets. The canola market overall has gained $20 per metric tons (MT) in the last half of July, hovering around the $700 per MT level. Soybean oil’s share of product value is trading at multi-year highs, which bodes well for the canola market since canola tracks soybean oil very closely, given that canola is a high oil-producing crop.

Weekly crop progress reports as of July 27 show that 97 percent of the canola in North Dakota is blooming, similar to last year, while 45 percent of the canola crop is coloring. Crop ratings indicate 57 percent of the crop is in the good/excellent category, compared to 64 percent last year at this time. The crop ratings have dropped in the last two weeks due to dry conditions. This may change with the recent wet weather in the state, but overall, the canola crop is slightly below last year’s condition ratings and slightly ahead of last year’s maturity. Lower temperatures recently have been very beneficial to canola, extending pod filling.

NDSU entomologists report that Bertha armyworm catches continue to be below economic thresholds in all trap sites in the state, while diamondback moth trap catches remain elevated. Ward, Renville, and Towner counties remained the top three trapping sites. Canola is most susceptible to larval feeding injury during the flowering and pod stages, especially from the second generation of the moth, and NDSU urges growers to continue to scout for the pest. Information on identification, scouting, and thresholds for diamondback moths are available at www.northerncanola.com.

The canola crop in Canada is also ahead of last year’s maturity levels and some fields in Manitoba will be ready to harvest in 3 weeks, while in North Dakota, canola will start to be harvested in the next 2 weeks.

In Montana, the canola crop continues to appear to be in worse shape as the USDA indicates only 6 percent of the crop is rated good/excellent, compared to 63 percent last year at this time. Dry weather is also causing lower expectations in that state. Several industry people have indicated the crop conditions do not appear to be as low as USDA is reporting and expect some condition revisions upwards.

Agriculture and Agrifood Canada revised its canola balance sheet in its July report, indicating ending stocks will continue to be tight over the next 12 months. It predicts canola production in Canada will be 19.2 million metric tons (MMT) in the next year, which would be down only 1 percent from last year, while some private estimates are as high as 20.2 MMT. There seems to be a lot of variability in the thoughts on crop size as some estimate actual planted acres are higher than reported. Others also report that many areas of Canada will have reduced yields due to dry conditions.

The ultimate level of ending stocks hinges on whether China continues to be a steady importer of canola. It has recently begun importing canola from Australia in significant amounts for the first time in five years and upcoming canola trade flows may be shifting globally as a result.

The November ICE canola futures closed lower on July 30 at $696 per MT, down $5.70 on the day but up $20 in the last two weeks. The January ICE canola futures contract closed at $707 per MT, down $5 on the day but up $23 in the last two weeks. Canola was much lower early in the session on July 30 but recovered over $10 per MT to close over its 20-day moving average.

Local cash prices on July 30 at nearby crush plants ranged from $21.27 to $22.26 for July and August deliveries, up approximately $0.48 per hundredweight in the last two weeks. New crop canola prices ranged from $21.72 to $22.55, up $0.48 to $0.67 per hundredweight in the last two weeks.