CNS Canada –– A stocks report from Statistics Canada has changed the dynamic of the canola market, one analyst says, though prices are not expected to plummet.
Statistics Canada estimates canola stocks at 2.016 million tonnes as of July 31. The government agency also upwardly revised year-ago production numbers.
“It causes a fairly significant shift in the canola outlook,” said Ken Ball of PI Financial Corp. in Winnipeg.
That shift means a negative undertone moving forward, especially as canola had been expected to hold up better than U.S. oilseeds, he said.
“It’s going to change people’s perception of the market a little bit. It also depends on how well the crop is going to come through.”
Uncertainty about the size of Canada’s upcoming canola crop will underpin the market and limit losses as harvest progresses and production becomes clear.
“We’re still getting too much rain across the Prairies, and it’s been a challenging start to the harvest,” Ball said.
Canola can take more water pressure than grains can, but fields have become difficult to get into and some crops have been damaged.
“There’s a lot of uncertainty about what the final crop size will be — although the pressure to get a big crop is a little bit reduced now,” Ball said.
Harvest has started in some areas, but progress is slow and expected to stretch into October.
Canola gained ground on the week, advancing $1.20 per tonne in the November contract, and $2 per tonne in the January contract.
— Jade Markus writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.