Canola Exports Ahead of Projected Pace
Ahead of Agriculture and Agri-Food Canada's April supply and demand estimates, it would appear that the current movement of Canadian canola could lead to an upward revision in forecast exports, currently estimated at 9 million metric tons.
On April 9, the USDA revised its estimate for Canadian exports for 2019-20 lower by 200,000 metric tons to 9.3 mmt, citing weaker demand from China. At the time, this move seemed more in line with the current pace of exports, although 534,800 mt has been shipped in the two weeks since (Week 35 and week 36) which may result in prospects for the year to be reconsidered.
When the four-week average export volume is considered, the week 33-36 average is 255,100 mt/week, which is the highest four-week average seen for any single week this crop year.
As of week 36 cumulative licensed exports for 6.882 million metric tons are 4.6% ahead of the same week in 2018-19. Should this pace of movement hold through the balance of the crop year, exports could reach closer to 9.7 mmt this crop year. Yet another way of viewing this is to consider the seasonal tendencies of canola movement. Over the past five years, an average of 67.6% of crop year canola exports were achieved as of week 36, a pace that would project forward to an export volume of 10.180 mmt. Given the slower pace of movement in 2018-19, 72% of total exports were achieved as of week 36, a pace that would project closer to volume of 9.6 mmt.
Cash trade on the West Coast also bears watching. On April 17, the cash basis was rolled from $20/mt over the May contract to $18/mt over the July contract. As a result, cash trade strengthened $5.40/mt, given the $7.40/mt carry in this market.
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Cliff Jamieson can be reached at firstname.lastname@example.org
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