Global rapeseed fundamentals were viewed as less bullish by the USDA in September. Ending stocks for 2016/17 were revised close to 1.2 million metric tons higher than estimated in August to 5.122 mmt or 7.5% of global demand. This compared with 5.8% reported last month and the 8.7% reported for 2015/16. This is reported in the monthly Oilseeds: World Markets and Trade report. The largest factor behind this move was Canada's larger-than-expected 2 mmt carryout for 2015/16, as recently reported by Statistics Canada's recent July 31 stocks report.
Global rapeseed/canola production was revised slightly lower than last month's estimate, with a 600,000 mt decrease in European Union production partially offset by a 400,000 mt increase in Canadian production to 18 mmt. Note that this compares to the 17.024 mmt estimate last released by Statistics Canada based on July estimates, while is perhaps more in line with the crop's potential. This can be supported by 1) Statistics Canada's final estimates which tend to be consistently higher than earlier estimates and 2) current prairie yield estimates, with both Alberta and Saskatchewan governments reporting higher estimates than released by Statistics Canada.
Perhaps disappointing is the USDA's view of Canada's fundamentals, with the estimate for Canada's exports increased just 200,000 mt from last month to 9.6 mmt, which compares to AAFC's latest estimate of 9 mmt. Domestic use is estimated at 8.550 mmt, very close to AAFC estimates for 2015/16. As a result, ending stocks are expected to be only 50,000 mt lower than the 2.015 mmt ending stocks estimated by the USDA for 2015/16 at 1.965 mmt, or 10.8% of estimated demand.
Canola closed lower Monday, with the nearby November contract reaching a seven-day low this session, ending $6.60/mt lower at $459.10/mt, near the lower end of today's trading range. For a period of eight weeks, the November contract has traded from a low of $442.20/mt to a high of $475.70/mt, while today's close is just $.15/mt below the mid-point of this range.
Perhaps a positive sign, futures spreads narrowed on Monday across all 2016/17 contracts, a less-bearish response by commercial traders, with cost of carry calculations pointing to an overall neutral sentiment held by commercial traders.
Cliff Jamieson can be reached at email@example.com
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