Weak canola plantings in Canada are helping to slow the price drop
Statistics Canada released new estimates for the 2022/23 Canadian crop this week, revealing that canola planted area would be reduced by 4.7%, from 9.1 million hectares to 8.67 million hectares. (Figure 1)
Despite this lesser area of land dedicated to canola production, the USDA expects the Canadian canola harvest to be slightly better than the 2020/21 season, with an average yield of 2.33 tonnes/ha and a total harvest of 20 million tons. (Figure 1)
However, there was a stark contrast in some of Canada’s canola-growing regions, with the prairie provinces of Albert and western Saskatchewan experiencing continued low rainfall early in the season. This failed to replenish low soil moisture reserves accumulated after last year’s disastrous season, but the drought allowed plantings to progress at a fairly normal rate.
Other regions, such as Manitoba, southern Saskatchewan and northern Alberta, experienced the opposite – unusually high rainfall, which delayed seeding, particularly in Manitoba where flooding hampered the seeding. About 53% of Saskatchewan’s canola crop was rated as late, while 71% of Alberta’s canola was rated in good to excellent condition.
Since the 15e June, the MATIF Canola futures curve fell a cumulative 9%. However, on Canadian news, the January 23 contract price rose 2% to AUD $1,022.
Turning to North American markets, the ICE canola futures curve saw a steeper drop of more than 18% over the same period. However, it appears news of lower planting estimates has been offset by recent coinciding weakness in soybean oil and crude oil, as brent crude oil prices fell below US$100 on barrel (Figure 4) due to continued concerns about the threat of a global economic recession. , the resurgence of COVID and the soaring US dollar.