SASKATOON — Momentum is finally building in Canada’s canola export program.
MarketsFarm analyst Mike Jubinville has heard reports that China recently purchased up to one million tonnes of the crop from a couple of grain companies for delivery in the March through May period.
However, he doesn’t think the Asian giant’s spending spree will have much of a buoying effect on futures prices, which have been on a downward slide since summer.
“I don’t think they’re going to chase the market higher,” he said.
“I think they’ve given us a price and said, ‘take it or leave it,’ and we took it.”
Mercantile Consulting Venture is also reporting on China’s recent shopping trip.
“There has been some fresh export sales activity to China, albeit not a big shift,” the firm stated in its recent market report for SaskCanola.
It has heard that four to six cargoes have been sold to China in the last couple of weeks. Mercantile said the sale is for February or March delivery, which is slightly earlier than what Jubinville is reporting.
“This is a welcome development, but we need to (do) much more of it to make a material difference,” said Mercantile.
The new sales come on the heels of a record 739,000 tonnes of canola purchased by China in December 2023, the vast majority of which was provided by Canada.
That is up from the 477,000 tonnes it bought in November, with Canada supplying about 400,000 tonnes of that.
Both of those totals were huge improvements from October, when no Canadian canola moved to China.
Canada’s total canola export program is still significantly lagging last year’s pace despite the improving sales to its biggest market.
Exporters shipped out 2.72 million tonnes of the crop through week 25 of the 2023-24 crop year, according to the Canadian Grain Commission.
That compares to 4.11 million tonnes of bulk shipments the same time last year.
“Are we going to be able to make even six million tonnes of exports this year?” Jubinville wondered.
“At this pace, I’d say no.”
That would be a bitter disappointment. Agriculture Canada is counting on 7.7 million tonnes of exports for the year.
Jubinville said China isn’t the problem. It’s Canada’s other main buyers.
“Where’s Mexico? Where’s Japan? Pakistan is not buying. The UAE (United Arab Emirates) toll crushes our canola and sends it to Europe. They’re not around,” he said.
Part of the problem is stiff competition from Australia, which has harvested four big crops in a row.
Their canola usually flows to the European Union, but it is likely being rerouted to markets in Asia due to the problems with the Suez Canal, said Jubinville.
Mercantile believes one of the reasons Canada’s sales have been so lacklustre is that Statistics Canada has overestimated the size of the 2023 crop.
Mercantile thinks farmers harvested 17.79 million tonnes of canola, which is below the official government estimate of 18.33 million tonnes.
Jubinville said the market seems to think the opposite is true, otherwise futures values wouldn’t be dropping so low.
However, he said increasing or decreasing Canada’s production by a few hundred thousand tonnes is immaterial because prices are being weighed down by the sluggish vegetable oil complex.
