If total beginning canola stocks for the 2012/13 crop year of 14.142 million metric tonnes are accurate, the Grain Commission's week 44 data would suggest 2.234 mmt of remaining inventory. This implies 1.709 mmt of farm stocks in addition to the 525,100 mt reported as week 44 visible stocks in commercial positions.
Total disappearance (domestic crush plus exports as reported by the Grain Statistics Weekly) over the final eight weeks of the crop year in the past five years has ranged from 1.532 mmt in 2007/08 to 2.228 mmt in 2010/11. The average disappearance over the past five years is 1.999 mmt in the final eight weeks of the crop year, while over the past three years, the average has been 2.164 mmt.
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Weekly usage of 209,000 mt, which is the three-week average of week 42-44 for the Grain Stats Weekly, over the next eight weeks would suggest the possibility of a 562,000 mt carryout on July 31, while allowing for light usage over the first few weeks of August while waiting for new crop supplies. Week 44's total disappearance was 251,500 mt, which is an unsustainable pace.
The rationing as required by the physical market is not conducive to higher prices. Just the same, the five-year price probability chart, as attached, indicates that old-crop pricing remains attractive in comparison to the past five years. Friday's close, at $617.40/mt (red bar) is to the right of the blue bar which indicates the price which defines the upper one-third of the pricing opportunities in the five-year period. In other words, prices have been above $554/mt (blue bar) one-third of the time over the past five years.
After taking into account the June 10 drop of $17.50/mt to $599.90/mt, the old-crop future continues to trade in the upper third of the market. In fact, considering the green bar which marks the $600 price, prices have only been higher approximately 15% of the time over the past five years. Perhaps not the home-run ball that some were looking for, but perhaps a marketing opportunity just the same.
Cliff Jamieson can be reached at firstname.lastname@example.org
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