The USDA trimmed its forecast for global rapeseed production by 2.6 million metric tons from its July estimate to 64.582 mmt, while the estimate for global demand was trimmed once again by 1.24 mmt to 68.191 mmt, the first decline after nine consecutive years of demand growth. The USDA has estimated record demand of 71.742 mmt in 2014/15.
Global stocks at the end of 2015/16 are estimated to fall to 3.382 mmt, down 1.21 mmt from last month's 4.592 mmt estimate while also down 50.8% from last year's 6.879 mmt. To put this in perspective, Canada carried 2.438 mmt out of the 2013/14 crop year according to Statistics Canada estimates, which is 72% of the volume estimated to remain in the entire world after the end of the current crop year.
There was no bullish response to follow the release of this data, with the ICE Canada November contract ending $26/mt lower at $481.60/mt. While the canola market continues to indicate a bullish, inverted market through November 2016, where each contract is trading higher than the one that follows, spreads have narrowed suggesting a weak inverse, as global supplies of competing oilseeds is limiting canola's price potential so far this crop year.
As seen on the attached chart, the global stocks to use ratio for rapeseed and canola combined has fallen from 10.1% in 2013/14 to an estimated 5% in 2015/16. At the same time, Canada's stocks/use ratio has fallen from 15.1% in 2013/14 to an estimated 3.4% this crop year, utilizing Agriculture and Agri-Food Canada's estimate of 500,000 metric tons carried out of the current crop year.
This tightening of stocks over the past two years has failed to lead to higher prices that have been realized in the past when stocks tighten in relation to usage, such as seen in 2011/12 and 2012/13. The average canola price on the continuous daily chart for the 2013/14 crop year is calculated at $465.92/mt, slipped to $454.24/mt in 2014/15 while is represented by the yellow bar on the attached chart at an average of $502.21/mt in the first 12 days of this crop year.
Recent estimates suggest the world will be down to bin bottoms by the end of this crop year, although the price response seems difficult to judge at this time.
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