Canada Markets

USDA's estimates reported in the Oilseeds: World Markets and Trade report shows a downward revision in global ending stocks of canola/rapeseed to 6.307 million metric tons. This would be down 25% from the previous crop year and the lowest estimated in three years, representing just 9% of global use. In order to arrive at this volume, global domestic consumption was revised higher this month at 70.157 mmt, but still represents the lowest consumption in six years and down 1.8% from the previous year, with reductions noted for both China and the European Union.

This month's outlook changes includes an 800,000 metric ton upward revision in European Union canola/rapeseed imports to 6 mmt given what is described is a high volume of trade. On Monday, EU statistics released shows imports of 4.333 mmt as of their week 36, or the week ending March 9, up 41% year over year. Imports will have to continue at this pace in order to reach the 6 mmt target. EU statistics shows Canada supplying 26.9% of total imports, while Ukraine has supplied 64.4%.

The USDA also highlighted Canada's efforts to diversify trade in this month's report, comparing the 2018 and 2019 calendar years. USDA reports a decline in 2019 exports to Japan of 200,000 mt, a 100,000 mt drop to the U.S., a 200,000 mt drop to Mexico and a 3.4 mmt decline to China. At the same time, gains of 900,000 mt were reported for the EU, 500,000 mt to the Middle East and 200,000 mt to the rest of the world. In total, a drop in 3.9 mmt was partially offset by 1.7 mt to other destinations. The USDA indicates that Canada's pace of shipments will increase in the second half of the crop year as global stocks are depleted.

While forecasts for stocks remain historically high in Canada given lack of trade with China, global stocks are viewed as much tighter relative to demand, with the stocks use ratio estimated at 9% for 2019-20, which compares to the recent low of 7.1% in 2016-17. Canada's stocks were also much tighter in that crop year while the crop year average on the continuous active chart was $504.10/mt in 2016-17 as compared to the $460.16/mt calculated so far this crop year.

A couple of things to watch in the data are the USDA's estimate of Canada's 2019-20 exports at 9.5 mmt, which compares to AAFC's most recent estimate of 9.1 mmt. As well, the USDA is estimating Canada's carryout at 3.744 mmt this crop year, which compares to AAFC's 3.2 mmt forecast. The potential remains for some significant swings in estimates which could have a significant bearing on global stocks prior to the end of the crop year.

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

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