Canada Markets

Canola's Stocks-to-Use Ratio Versus Price

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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This chart highlights the global stocks-to-use ratio for canola/rapeseed (blue line) along with the stocks-to-use ratio for Canadian canola (red line), measured against the secondary vertical axis, along with the average crop year price calculated using the continuous active chart on ProphetX (grey bars) measured against the secondary vertical axis. (DTN graphic by Cliff Jamieson)

Tuesday's Standing Committee on Agriculture and Agri-Food meeting, was streamed live on the internet. During it, canola producer and former industry participant Terry Youzwa stated that $1/bushel had been lost, based on the change in cash canola prices since China's trade restrictions were announced, while the industry could face another $1/bu. loss without some form of action taken.

The USDA's April Oilseeds: World Markets and Trade report highlighted Canada's challenges with respect to lost export opportunities to China, reducing its estimate for Canadian exports by 1 million metric tons to 10.6 mmt, while still well-above the 9.8 mmt estimate last released by Agriculture and Agri-Food Canada.

This month's USDA analysis saw 1.1 mmt added to the forecast for global canola/rapeseed carryout to 7.560 mmt, based on Canada's growing stocks, which represents 10.6% of estimated global annual use. This would be the highest stocks-to-use reported in four years given USDA's historical data, as indicated by the blue line on the attached chart.

The red line indicates the trend in Canada's stocks-to-use ratio for canola, based on AAFC estimates. March AAFC data estimates a 3.5 mmt carryout that represents an 18% stocks-to-use ratio, the highest in five years.

The yellow bar represents the 2018-19 average futures value as calculated by ProphetX, using the continuous active daily chart. Since Aug. 1, this average is calculated at $483.79/mt, down from the $508.98 average calculated for 2017-18, which was the highest average calculated in five years.

This average futures price for the crop year ranges from $454.32/mt to $465.92/mt in the 2013-14/2014-15 crop years when the most recent highs in the stocks-use ratios were reported, perhaps a hint of what lies ahead in the absence of normalized trade.

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DTN 360 Poll

This week's poll asks if weather forecasts in the U.S. that could lead to a switch from some corn acres to soybeans will have any effect on your planting decisions. You can weigh in with your thoughts on this poll, located on the lower right side of the DTN Canada Hone Page.

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

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Comments

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JBOLLIG2140785991
4/9/2019 | 10:05 PM CDT
Would go prevent plant corn before we would consider switching to soybeans. Pays better.