The Canadian Oilseed Processors Association weekly data shows the crush reaching 198,859 metric tons in the week ending October 26, the largest weekly crush ever with a plant capacity utilization estimate of 93% for the week. This is up from a capacity utilization of 85.8% in the previous week and the four-week average of 82.9%.
Looking back in time, the weekly COPA crush exceeded 190,000 metric tons once near the end of the 2015/16 crop year and once again in the week ending September 21. This week's volume is up 8.5% from the previous week and is well-above the four-week average of 177,121 mt.
While commercial demand has supported prices and has lifted today's January high to within $10.20/mt of the contract high of $535.70/mt, basis levels, even at the crushers, remain sloppy in the front months. Despite the delayed harvest on the Prairies, producers have delivered 118,500 mt more canola into the system this year than seen in the first 12 weeks of the 2015/16 crop year. With year-to-date exports lagging last year by close to 450,000 mt (licensed exports only), commercial stocks are seen growing to comfortable levels in week-over-week data.
This month's USDA Foreign Agricultural Service China: Oilseeds and Products Update once again reminded us of China's huge state-owned rapeseed oil supplies. As of June 1, the country was reported to have sold off 2.28 million metric tons of its 6.41 mmt of supplies, which is to reach end users in the last half of 2016 and impact import demand. At the same time, this week's Dow Jones release of China's official import data for September shows China's September imports at 57,978 metric tons, up 119% from September 2015, almost entirely supplied by Canada. As well, January-through-September imports of rapeseed oil are reported to be down 8.49%, at 511,168 mt, which compares to a 28.4% year-to-date drop in palm oil and a 37% year-to-date drop in soybean oil imports. Imports of canola oil from Canada in the first nine months of 2016 are reported to be 9.74% higher than the same period in 2015.
Pondering this data, one can reflect back to DTN Analyst Todd Hultman's Oct. 18 piece titled Cotton, Corn and China. In this recent work, Todd points out China being the largest weekly buyer of cotton for the week, while U.S. sales and shipments of cotton to China for 2016/17 were up 343% from the same period a year ago, despite China holding huge state-owned stocks. We are continually reminded of the burdensome stocks held by China, although in the case of cotton, it was cheaper for China's buyers to import than it was to buy internal supplies. Todd hints that this potential exists with corn, while the same logic may also be expanded to other commodities.
Cliff Jamieson can be reached at firstname.lastname@example.org
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