Statistics Canada reported 778,402 metric tons crushed in September, up 116,434 mt from the 661,968 mt crushed in August. This volume is down a modest 0.9% from the same month in 2020, while 4.7% higher than the three-year average for this month. It is also well-above the 621,639 mt needed this month in order to stay on track to reach the current Agriculture and Agri-Food Canada (AAFC) crush forecast of 7.5 million metric tons, as shown by the green line on the attached chart.
Over two months, the cumulative crush totals 1.44037 million tons, down 10.9% from the same period in 2020-21, while the slowest start to crush in four years despite the estimated crop sized being the smallest in 13 years. This is a quick start when one considers the current AAFC forecast points to a 28% year-over-year drop. This pace is also despite a negative board crush calculation throughout the month.
A ProphetX chart approximating the move in the Canadian Canola Board Margin Index turned negative on Aug. 23 and has remained in negative territory since. This index ranged from minus $13.64/mt to minus $34.67/mt during the month of September, averaging minus $22.25/mt.
Based on Statistics Canada data, the oil content is reported at 41.2% in September, down from 43.4% reported in August and the lowest monthly oil content reported since August 2005. Statistics Canada data shows an average oil content of 43.4% for 2020-21, while the five-year average is 43.8%. The Canadian Grain Commission's Preliminary quality data of eastern and western Canadian canola report, based on harvest samples, shows an average oil content of 41.8% across all grades of western Canadian canola and 44.4% in eastern Canadian canola. Current production data shows 72,700 mt of production in the eastern provinces, accounting for just 0.6% of total production.
Current estimates not only show canola crush falling by 2.9 mmt in 2021-22, but a 1% drop in oil content would equal 75,000 mt of oil produced based on the current 7.5 mmt crush forecast.
There is a possibility that the most recent AAFC forecasts have overstated export demand and understated domestic disappearance. As of week 11, which takes us to the week ending Oct. 17, we see that cumulative exports are roughly 206,000 mt behind the pace needed to reach the current export forecast, while cumulative domestic disappearance is reported at a pace that is 354,000 mt ahead of the pace needed to reach the current demand forecast.
Cliff Jamieson can be reached at firstname.lastname@example.org
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