Canada Markets

The jury remains out over the true supply situation for canola on the Canadian prairies. Some users have expressed their beliefs that current on-farm stocks may be understated, with the actual supply perhaps not as critical as once thought. The May/July spread, which is the commercial trader's view of the fundamental situation of the market, indicates a bullish scenario in a sense that the spread does indicate a current inversion of $11.20/mt, but this has backed off from a February high of $15.40, indicating the bullish sentiments may be waning.

Producers have been aggressive shippers of product, with the latest week 31 data indicating 303,500 metric tonnes delivered, which is 2% higher than the average weekly delivery over the previous 30 weeks. Year-to-date deliveries reveal movement to be 9.1% behind the same date last crop year, while 11.9% ahead of the previous 3-year average.

In the 2011/12 crop year, weekly deliveries began to move sharply lower starting in week 34, dipping to as low as 125,200 mt in week 43 before recovering to 201,600 mt in week 52, the last week of the crop year (not shown). It is very unlikely that the current pace of movement can last long.

When year-to-date exports, combined with YTD domestic disappearance and also the commercial visible supplies are totaled as of week 31, 70% of the estimated 14.1 mmt of total supplies for the 2012/13 crop year are now accounted for.

Perhaps producer deliveries can be easily explained by the rush to beat the spring break-up, or a rush to sell before the massive South American crop hits the market, or is it that there is simply far more in those bins that needs to move than many are aware of?

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

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