ICE weekly outlook: Canola acres could be in flux

ICE July 2020 canola with 20-, 50- and 100-day moving averages. (Barchart)

MarketsFarm — Canada’s canola acres are generally expected to be higher in the first area report of the year from Statistics Canada, compared to the 20.96 million acres estimated to have been seeded in 2019.

Estimates are wide-ranging, with some analysts predicting a slight reduction in canola area and others calling for an increase of up to five per cent.

Last month, the federal agency postponed the report from its April 24 release date to Thursday (May 7) because of the COVID-19 pandemic. Its second report remains on schedule to be released June 29.

Any reduction in canola acres would be in line with the trend over the last few years, which saw acres fall from 22.81 million in 2018-19 to 20.96 million in 2019-20.

Market participants believe an increase in exports, despite the Canada/China dispute, could spur a rise in canola acres.

In the 2019-20 marketing year-to-date, exports hit 7.35 million tonnes, well above the 6.82 million exported during the same time the previous year, according to data from the Canadian Grain Commission (CGC).

An increase in domestic use may also spur more canola acres this year. The crush year-to-date has accounted for 7.67 million tonnes compared to 6.8 million at this point in 2018-19, according to the CGC.

However, some participants believe prices could be a factor in what farmers decide to plant this spring. Should soyoil on the Chicago Board of Trade tumble in 2020-21 due to ill effects on the economy from the COVID-19 pandemic, that will certainly play into canola prices.

— Glen Hallick writes for MarketsFarm from Winnipeg.

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