Statistics Canada reports 722,433 metric tons of canola seed crushed in March, up from the 635,526 mt crush in February and 7.7% below the previous four-month average. This is the third-lowest crush reported this crop year, 6% lower than reported for March 2018 and 11% lower than the three-year average for this month.
The domestic crush will play a vital role in light of the current trade issues with China facing producers. As of week 38, exports through licensed facilities trail the year-ago pace by 748,900 mt or 9.9%, with the risk that exports will slow further over the balance of the crop year.
The cumulative crush reported by Statistics Canada for the first eight months of the crop year totals 6.083 million metric tons, down a modest 52,087 mt or 0.8% from the year-ago pace. Given Agriculture and Agri-Food Canada's April forecast that saw the agency's April crush forecast left unchanged at 9.250 mmt, down 0.2% from the estimate for 2017-18, the 2018-19 cumulative volume is 84,000 mt or 1.4% behind the steady pace needed to reach this domestic crush forecast.
Hypothetical crush returns have shown improvement in March. An approximation for the Canadian Canola Board Margin Index using ProphetX shows the mean index at $91.45/mt for the month of March, up from $75.99/mt in the month of February and above the $84.53/mt calculated for March 2018. This mean index has remained steady over the first 25 days of April at $90.01/mt.
There are assurances from government officials that canola seed is the only commodity affected by the market access issue with China. This week's official import data for March released by China Customs could prove favorable for canola oil. Soybean oil imports fell 34.4% in March from the March 2018 volume, while palm oil increased by 26.4% and canola oil increased 71.5% from the year-ago volume, according to a summary table. This bears watching.
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