Canada Markets

The old-crop canola basis, calculated with accessible internet bids, weakened $1 per metric ton over the course of this week to $27/mt under the July, which translates into a $458.20/mt or $10.39 per bushel cash bid based on Friday's close.

The old-crop market remains well supplied. Producers delivered 315,900 metric tons in week 44, or the week ending June 7, slightly below the 330,300 mt delivered the previous week but above the four-week average of 263,900 mt. A volume of 322,000 mt was delivered by producers in the same week last year.

Week 44 visible stocks were reported at 1.1862 million metric tons, slightly higher than the previous week, but almost 73% above the visible stocks reported in the same week of the 2013/14 crop year. Of this volume, stocks in primary elevators are reported at 833,400 mt, as compared to the 395,100 mt reported as of the same week last year.

Despite an above-average number of vessels waiting in Vancouver reported in the week 44 lineup, canola exports were reported at 127,800 mt, below the average of the previous four weeks calculated at roughly 174,000 mt. Weekly crush was reported at 148,410 mt, slightly higher than the four-week average.

There still remains a wide range of estimates for 2014/15 carryout. Agriculture and Agri-Food Canada's May supply and demand estimates suggested a carryout of 950,000 mt, down 500,000 mt from the previous month, while this week's USDA data left Canada's canola carryout unchanged at 2.079 mmt. Given the weakening old-crop basis over time, combined with the weakening July/Nov spread, which has moved from a $10.80/mt inverse at the end of May to today's $2/mt inverse (July trading over the November), chances are that we are leaning towards stocks larger than indicated by Canada's government.

Despite concerns about the 2015 crop, which has been dealt a blow from frost, drought and insects across the prairies, the posted November delivery basis levels has remained steady for at least three months, with today's prairie average calculated at $20.35/mt under the November future. The Nov/Jan and the Jan/March spread remain inverted (Nov trading over the Jan and Jan over the March), a bullish commercial signal, although these spreads have remained steady so far this month as the industry seeks balance between would could be a tight canola fundamental situation along with much weaker soybean fundamentals.

DTN 360 Poll

This week's poll asks what you think about the consultation process in Saskatchewan regarding who should and should not be allowed to own farmland. We'd love to know what you think on this matter. You can weigh in to our poll found at the lower right of your DTN homepage.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

(ES)

© Copyright 2015 DTN/The Progressive Farmer. All rights reserved.