Prairie canola basis to continue improving

Commodity News Service Canada — Canola basis levels in Western Canada are already looking better than year-ago levels, but they’re expected to continue improving, Bruce Burnett said during a presentation at the Cereals of North America conference in Winnipeg.

Ending stocks in 2014/15 are predicted at around 911,000 tonnes by CWB, as demand remains strong and production is expected to drop from last year. At the end of 2013/14, stocks of canola were at 2.363 million tonnes, Statistics Canada data shows.

CWB predicted exports of canola at 8.7 million tonnes for 2014/15 and estimated Canadian canola production at 14.863 million tonnes, below the current Statistics Canada estimate of 14.080 million tonnes. In 2013/14, 17.966 million tonnes of canola were grown in Canada.

The relatively tight fundamental situation won’t necessarily be reflected in the ICE Futures Canada market for canola, as the U.S. is expecting to produce a record large soybean crop this year.

But, Prairie basis levels will likely improve, as they will need to ration demand as we move into the last quarter of 2014/15, Burnett said.
There have been rumblings of quality problems for many Canadian crops this year, due to large untimely amounts of rainfall in a lot of places. But, overall the canola crop quality is average with a bit of a higher protein meal and lower oil content than a year ago.

Burnett said the better meal content is good for canola this year, as a recent rally in North American oilseeds is linked to strength in soymeal. But, in the long term he is neither bearish, nor bullish on canola.

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