For the third consecutive month since December data was released, USDA's Oilseeds: World Markets and Trade report shows ending stocks and stocks-to-use ratio for global canola/rapeseed falling to lower levels.
Wednesday's report shows ending stocks falling to 4.515 million metric tons, down 34.3% from the 6.871 mmt carryout reported for 2014/15. This represents a global stocks-to-use ratio of 6.5%, down from 9.6% in 2014/15. Global use of an estimated 69.428 mmt represents the first year-over-year drop in usage seen in nine years.
The tighter stocks are tied to an estimated drop of 4.5 mmt in global production estimated for 2015/16 of 67.454 mmt, falling well short of demand. Year-over-year drops in production are estimated for China (672,000 mt), India (310,000 mt), European Union (2.650 mmt) and the "other" category (1.7 mmt). An off-setting year-over-year increase in production is seen in Canada of 790,000 metric tons, according to USDA data.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
The attached chart shows stocks-to-use ratios falling in 2015/16 for the second straight year to 9.8% in Canada (red line) and to 6.5% globally (blue line).
The grey bars on the chart represent the average crop year price (Aug. 1 to July 31) as calculated on the continuous daily futures chart on ProphetX, while the yellow bar represents the 2015/16 average to-date (Aug. 1, 2015, through March 9, 2016). Despite the falling stocks as a percentage of use, this average price has failed to reflect the tightening global stocks, with the crop-year average calculated at $465.92/mt in 2013/14, $454.24/mt in 2014/15 and $472.03/mt so far this crop year, as indicated by the yellow bar.
Given this situation, prices hold potential to find continued support in old-crop contracts with the potential to see a move higher in the upcoming crop year while global crops will be watched closely. AAFC's February estimates suggest track Vancouver bids in 2016/17 will range $15 to $25/mt higher than the current crop year.
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