The supply and demand fundamentals for canola are supportive of price this winter, but Canadian farmers are facing a situation where geopolitics are dominant and supply/demand is secondary for canola.

“Given the supply-demand fundamentals … if we didn’t have the political issues at play, with Donald Trump and the tariff situation, the biofuels and the threat looming of China import tariffs, we would already be trading $700 futures today,” said Mike Jubinville, a senior markets analyst with Glacier MarketsFarm.

“That’s what the political uncertainties have injected.”

As of Jan. 23, canola futures for the May contract were trading around $640 per tonne.

Jubinville presented a grain and oilseed outlook at the Manitoba Ag Days trade show held in Brandon from Jan. 21-23.

He ran through a series of chart, showing that domestic crush and canola seed and oil exports have been strong over the last several months. Given the smaller crop on the Prairies, canola stocks at the end of the 2024-25 crop year will be low.

Jubinville pegged the ending stocks-to- use ratio at seven per cent, which is below average.

“When I look at it from the canola specific fundaments of supply and demand, it actually appears pretty price-friendly,” he said.

Jubinville clarified that he isn’t “bullish” on canola, but there could be better prices for new crop canola.

“I’m probably inclined to wait (to price new crop),” Jubinville said, in response to a question from the audience at Ag Days.

“In a tight stocks scenario, with a bit of rationing back of canola acres, it may present some new crop pricing opportunities — that we have yet to see.”

Despite the low stocks and strong demand for Canadian canola, there is now a massive price gap between canola and European rapeseed.

In the third week of January, EU rapeseed futures were trading at a $143 per tonne premium to canola futures.

Europe and Ukraine had disappointing rapeseed crops, and European biodiesel producers will need to import canola to compensate for the shortfall.

“EU production (of rapeseed) is down. EU stocks down. We think EU rapeseed imports and canola imports will have to reach a record level of close to 7.3 million tonnes,” said David Mielke, a market analyst with Oil World.

Demand from Europe is supportive of price, but multiple geopolitical issues are keeping a lid on canola this winter.

First off, there is U.S. president Donald Trump and his threat of imposing 25 percent tariffs on all goods from Canada. Then, there is China and its investigation into whether Canada is unfairly dumping canola into the Chinese market.

Adding to the confusion, there is uncertainty around the U.S. biofuel market.

On Jan. 15, the U.S. Department of Agriculture released an interim rule around feedstocks for the production of biofuels. The rule didn’t mention canola.

“The rule issued today establishes a framework to connect climate-smart agriculture (CSA) practices applied in the production of feedstock crops with reductions in the carbon footprint of biofuels. The rule includes three feedstock crops: corn, soy, and sorghum.”

That decision rattled the canola markets, but Jubinville recently spoke with representatives of canola grower associations in the United States who believe canola will ultimately be included in the list of eligible feedstocks.

That’s positive, but Canada’s chaotic trade relationship with the U.S. will be much more difficult to fix. Plus, it’s possible that China will impose duties on Canadian canola sometime in 2025.

Therefore, it’s hard to imagine that canola fundamentals will wrestle back control over the market.

“At this point, I would say ‘no,’ ” Jubinville said.

“We are subject to these political manipulations to a degree in the marketplace that I don’t think I’ve seen in 37 years that I’ve been involved in this business.”

Check out all our coverage of Manitoba Ag Days 2025 here.

The post Manitoba Ag Days: ‘Political manipulations’ hold back canola – analyst appeared first on Grainews.

“We’re in the same boat,” said Barry Coleman, executive director of the Northern Canola Growers Association.

“It’s not a situation where the Canadian grower is getting less than the U.S. grower. They’re both affected the same.”

Canadian canola futures on the ICE exchange tanked when news broke Sept. 3 that China was launching an anti-dumping investigation into Canadian canola. Prices were quickly limit-down, although the November contract stabilized above $570 after falling from $620.

At midday Monday, the ICE Futures canola market was posting solid gains as speculators covered short positions and end-users hunted for bargains.

Despite the United States not being targeted in China’s investigation, U.S. elevator prices instantly reflected the futures selloff. When it comes to canola, whatever affected Canadian values affects U.S. values, and vice versa.

“It was the exact same thing. Prices were down the same,” said Coleman.

It’s part of the reality of canola seed, canola oil and canola meal that, like most bulk commodities, individual markets can be interrupted, but global supply and demand is flexible and fluid. If one source of either is blocked, the commodity tends to flow to the next easiest place.

“People need to remember this has happened in the past,” said Jeff Nielsen, a central Alberta farmer with much experience watching international market disruptions from inside farm organizations such as Grain Growers of Canada and the Alberta Barley Commission.

Many farmers remember the dispute with China following the arrest of Huawei executive Meng Wanzhou in late 2018. Within months both Viterra and Richardson were blocked from selling to China, severely reducing Canada’s sales to China for years. The Canola Council of Canada estimates that market access loss cost Canada’s canola industry $1.54 to $2.35 billion.

However, Canadian canola flowed to other markets, so after being discounted during the dispute, Canadian canola flowed back to China at market prices soon after the dispute was resolved.

Nielsen said numerous other countries have these sorts of issues. Canada lost most of the Saudi Arabian barley market in 2018 after the Canadian government criticized the Saudi government’s treatment of political dissidents. Australia lost Chinese barley sales after offending the Chinese government. Barley flow simply shifted.

As LeftField Commodity Research noted in a report, “it’s no coincidence that Canadian barley exports jumped during this period as it overlapped with China’s excessive tariff rate on Australian barley.”

Australia’s barley exports fell to zero, but “overall Australia’s exports didn’t suffer and movement picked up to other destinations, such as Saudi Arabia, Japan, Vietnam and Thailand. Following the tariff enactment, China began swiftly scooping up Canadian barley to fill the gap.”

The Australia-China dispute was resolved in August 2023 and Australia’s exports resumed, pushing Canada back to its traditional share of the market.

Other markets get blocked for various reasons. India is infamous for import restrictions when its government feels domestic prices are too low, leaving many Canadian pulse crops suddenly seeking new homes.

The precise impact of a foreign border blockage on western Canadian prices is impossible to gauge, said broker David Derwin of Ventum Financial in Winnipeg.

“How do you figure that out when there’s 14 other factors?” said Derwin.

“It’s not just a canola story.”

For instance, he said, the China news might have seemed to knock down canola by seven per cent, which is a lot. However, that same day most other associated commodities, such as soybean oil and crude oil, fell about four per cent. A net three per cent drop on the news isn’t gigantic.

China has also previously restricted Canadian canola sales, only allowing southern ports to be used for a few years due to what the government said was a concern about spreading Canadian blackleg strains to the country’s canola-growing regions in the north.

Sometimes Canadian canola has ended up in China despite the restrictions, flowing along meandering routes of transhipment through the Persian Gulf and other third party provider regions. That comes at a discount to Canadian canola because the extra transportation takes away some of the farmgate price. However, like most commodities, where there is demand, supply will find a way.

Nielsen said he thinks Canadian farmers shouldn’t panic. The canola industry is much more developed than it was in 2018. Major new crushing capacity has been built, with more coming, so not only are canola exports more segmented today, but huge North American demand for biofuel stocks has been soaring. China doesn’t have the same hammer lock on Canadian exports as it once did.

“We’ve changed a lot in the last five years,” said Nielsen.

The post Chinese tariffs not expected to stop canola flow  appeared first on Grainews.

Jubinville made the comments during the MarketsFarm webinar on Wednesday, ‘the Long and Short on Markets.’

“It’s premature to say we are outright bullish, but we’re not bearish. We are presently sideways,” he stated.

One element that could help canola turn around are export sales to China. While reliable customers such as Japan turn to other sources for canola, Australia being one, Jubinville said China has been ramping up its purchases.

Another element has been the increased domestic crush, due to expansion in the renewable diesel industry. Jubinville noted the crush is running near or at full capacity, with some crushers set to expand their operations.

As well, commercial buying to fulfill these orders would encourage Prairie farmers to empty out more of their grain bins ahead of spring planting. One issue being that becoming farmer selling as more producers rush to get their canola into the commercial pipeline.

Also on the negative side, Canada could see its canola ending stocks increase despite recent stronger demand. Jubinville surmised the carryover could reach as much as 2.4 million tonnes for 2023/24, but it’s more likely to come in lower.

However, as spring approaches canola prices more often than not climb higher, with some of the best prices of the year being offered, Jubinville stressed.

One factor still pending at the time of writing was the prospective plantings report from the United States Department of Agriculture, set for Mar. 28. How the USDA’s forecast on soybean acres shakes out would go some length in guiding its path on the Chicago Board of Trade.

With that in mind, the average trade guess placed 2024/25 planted soybean acres at 86.7 million. While that’s under the 87.5 million acres projected at the USDA’s Outlook Forum last month, it’s more than the 83.6 million that were seeded a year ago.

Any significant increase in those acres could weigh on soybean values and in turn, put pressure on canola.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

The post ICE Canada Weekly: Canola set to rise, but not a sure thing appeared first on Grainews.

“Until we get a big driver in place that gets the market really nervous and worried,” Ken Ball of PI Financial in Winnipeg said canola will pull back.

He suggested the dryness across the Canadian Prairies could become a major issue if there’s insufficient moisture by seeding time.

After a stretch of declines, Ball said ICE canola futures received support from seasonal rebounds and from some short covering. However that rally hit pause on Mar. 13 due to an increase in farmer selling. Cash prices for canola on Mar. 12 hit C$14 per bushel.

“We are hearing reports of growers selling canola in droves,” Ball said, noting they hung onto it for most of the winter and were now eager to sell it ahead of spring planting.

“This is really a golden opportunity to do it,” Ball advised.

On the downside of the equation, he noted that canola exports remained in the doldrums. The Canadian Grain Commission reported that as of Week 31 of the 2023/24 marketing year those exports were 3.44 million tonnes, while the same time the previous year they were 5.31 million.

“Canola exports unfortunately are getting worse and worse,” Ball said.

During the past week there were unconfirmed reports of China having purchased upwards to 600,000 tonnes of Canadian canola. He cautioned there was similar scuttlebutt of China buying 400,000 tonnes of canola in December, and another rumour for 300,000 tonnes in January – but nothing has yet to show up in the CGC’s monthly report.

Ball pointed out that doesn’t necessary mean China had not made any of those purchases, rather it could be those amounts of canola had yet to be shipped out of Canada.

“The price of canola has become more attractive, so it would be logical to expect some uptick in exports finally at these levels. Especially with [Malaysian] palm oil getting more expensive,” he said.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

The post ICE Canada Weekly: Look for canola to ease back appeared first on Grainews.

A total of 10.523 million tonnes of canola were crushed in the country in 2023, which was up by 20.0 per cent from the previous year and above the previous record of 10.290 million tonnes set in 2020.

Meanwhile, Canada’s soybean crush decreased by 5.7 per cent in 2023 to 1.763 million tonnes. Oil production totalled 4.422 million tonnes for canola and 329,856 tonnes for soybeans. Meal production totalled 6.200 million tonnes for canola and 1.371 million tonnes for soybeans.

High prices and increased exports of canola oil were behind the strong canola crush pace, according to StatCan. In 2021, the price of canola oil increased by 65.2 per cent over the previous year, and it has remained elevated ever since. In 2023, Canadian exports of canola oil increased 20.3 per cent from 2022, totalling 3.150 million tonnes. This trend was underpinned by higher supplies of canola, as production of canola was 31.2 per cent higher leading into 2023 than in the previous year.

In the United States, over the 2023 calendar year, oilseed processors crushed 61.268 million tonnes of soybeans which was up by 2.6 per cent from the previous year. A total of 2.059 million tonnes of canola was crushed in the U.S, marking a 19.2 per cent increase from 2022. Oil production totalled 12.052 million tonnes for soybeans and 825,227 tonnes for canola, while meal production totalled 45.241 million tonnes for soybeans and 1.198 million tonnes for canola.

The post Canadian canola crush hit record in 2023: StatCan appeared first on Grainews.

The May canola contract closed at C$591.00 per tonne on Feb. 28, up from C$584.10 one week earlier. Prices started the week in decline until a two-day rebound after the weekend. Ken Ball, a Winnipeg-based trader at PI Financial, said canola’s behaviour was similar to other crops including corn, wheat and soybeans.

“They’re all showing a little hint of some short-covering (and uncovering) some support. But not enough to trigger a lot of excitement yet,” he said. “We don’t yet have a lot (of news) to go on. There’s not much sparking anything.”

With spring approaching, as well as potential lows in prices, Ball expects more short-covering in the coming weeks and end users to increase their coverage.

“The balance should start to shift, but it’s hard to say if there’s anything really big brewing right now,” he added. “As we move into the month of March, the markets have to get nervous about spring. There’s always some weather issues. We never have a smooth spring across all of North America generally.”

Soyoil placed large amounts of pressure on canola prices, according to Ball. Over the past 10 sessions, the May contract declined eight times and lost 1.74 U.S. cents per pound over that span.

“The stocks have tightened up, but we anticipated bean oil to be firmer than it has been. It’s been on the weak side,” he said. “It’s not showing a bottom at all. It’s still in a bit of a downward channel.”

While Canada’s canola crush has increased over the past year, exports have been down nearly 33 per cent, causing even more pressure on the oilseed. However, there are whispers that much-needed overseas demand may be coming.

“We’ve heard talk that China may have stepped up some canola buying over the last month or two, but it hasn’t yet showed up on the export (numbers). So far, it’s only been rumours, but the exports may perk up a bit as we go into spring,” Ball said.

He also described March as a “transitional month” as positions are exited prior to the expiry of March contracts. However, trading activity hasn’t changed recently, according to Ball. Right now, canola is still looking for a catalyst.

“We’ve had a little bit of moisture recently (on the Prairies), but we’ve barely made a dent in the drought in the real dry areas,” he said. “I’m not getting a lot of feedback from my clients this year about (canola) acreage decisions. I guess a lot of them are waiting longer than usual to make those decisions…I think we’re going to see canola acres come down a bit.”

— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.

The post ICE weekly outlook: Canola seeking a catalyst appeared first on Grainews.

“Nvidia is bigger than all of Canada’s economy. It’s bigger than the Chinese stock market by itself,” stated Anderson. “That report, even though it’s not related to canola will have an impact. It’s the most powerful stock in the world.”

Based in Santa Clara, Cal., Nvidia controls about 80 per cent of the world market’s share of high-end graphics processing units and is well involved in developing artificial intelligence.

Should Nvidia’s report be favourable to the world markets, including canola, he pegged resistance for the May contract at C$620 per tonne on the Intercontinental Exchange. If momentum builds for the Canadian oilseed, Anderson put the next level of resistance at C$650/tonne, followed by C$680.

If Nvidia’s report is negative, Anderson said “the equity world stumbles, and it will feed itself” with crude oil, corn and other commodities falling back.

“Canola will get caught in the crossfire. It can go up to $620 or it can go down to $550,” he said.

Anderson added that canola, along with corn and soybeans on the Chicago Board of Trade, are oversold and looking for an increase.

“We won’t see $700 in the near future, but I hope we won’t see $550,” he commented.

Nvidia was scheduled to release its report after the North American markets closed on Feb. 21. The effects were to be felt the following day.

— Glen Hallick reports for MarketsFarm from Winnipeg.

The post ICE Canada weekly outlook: Markets to react to Nvidia earnings report appeared first on Grainews.

As of Feb 13, 2024, the net managed money short position in canola futures came in at 147,603 (7,808 long/155,411 short), which was up by roughly 9,000 contracts from the former record hit just the previous week.

Open interest in the canola market came in at 308,702 contracts, which was up by 3,894 on the week.

At the Chicago Board of Trade, the net short position in soybeans increased by about 3,000 contracts on the week at about 124,400 contracts.

Meanwhile, the net short position in corn grew by about 11,300 contracts on the week to come in at roughly 305,000 contracts.

In wheat, the Chicago soft wheat market reported a net short position of about 57,900 contracts. The net short in Kansas City hard red winter wheat came in at roughly 34,300 contracts. In Minneapolis spring wheat, managed money traders were holding a net short of around 28,800 contracts.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

The post Record large fund short position grows in canola appeared first on Grainews.

As of Jan. 30, 2024, the net managed money short position in canola futures came in at 131,534 (5,388 long/136,922 short), which was up by roughly 200 contracts from the previous week.

Open interest in the canola market came in at 292,495 contracts, which was up by 17,653 on the week.

At the Chicago Board of Trade, the net short position in soybeans increased by about 5,000 contracts on the week at about 101,600 contracts.

Meanwhile, the net short position in corn grew by about 4,000 contracts on the week to come in at roughly 279,500 contracts.

In wheat, the Chicago soft wheat market reported a net short position of about 67,700 contracts. The net short in Kansas City hard red winter wheat came in at roughly 31,900 contracts. In Minneapolis spring wheat, managed money traders were holding a net short of around 27,200 contracts.

— Phil Franz-Warkentin is an associate editor/analyst with MarketsFarm in Winnipeg. 

The post Funds still sitting on large net short position in canola appeared first on Grainews.

“I think there’s a feeling in the country that some farmers are throwing in the towel. There’s still a bearish outlook for canola in the longer term,” he stated, suggesting growers were taking whatever they can get for their canola. He called it “emotional selling.”

Trading volumes surged to more than 60,000 contracts on Jan. 30 and 31, which Klassen said was a combination of that farmer selling plus the speculative funds selling as well while the commercial buyers made some limited purchases.

“When you have high volumes like that, it confirms the price structure. Sometimes we are getting to [price] lows where the markets are due for a balance.

Klassen said to keep a close eye on the upcoming stocks as of Dec. 31 report from Statistics Canada to be released Feb. 8.

“That stocks report is going to be very important this year. I think it’s going to show us that the farmer has not sold a lot of canola,” he said.

The Canadian Grain Commission reported producer deliveries of canola were 7.8 million tonnes as of Jan. 21. That was down from 9.6 million tonnes the same time last year.

“There are ideas that those stock reports are important because it confirms that production number. If the stocks [next week] come out a bit higher than we are anticipating, that crop was better than what StatCan had on their November survey,” Klassen continued.

StatCan pegged the 2023/24 canola harvest at 18.3 million tonnes, which was an improvement over previous estimates that crop was going to be smaller due to dryness in the early summer.

Klassen also noted canola’s March/May spread was getting wider.

“That tells us the end users are pretty well covered for their nearby requirements,” he said. “The market is telling you, ‘We don’t need your canola right now. Please store it and sell it to us in June-July.’”

Klassen noted recent dryness in Argentina and a much smaller than expected soybean harvest in Brazil has provided some support to the Chicago soy complex and to ICE canola futures. But he said the large soybean harvest overall to coming out of South America will put pressure on North American oilseeds, especially the products.

“The oil complex and the meal complex really have a bearish outlook going into summer,” he commented.

With early estimates of more U.S. soybean and Canadian canola acres to be seeded this spring, Klassen said that could eliminate the usual rally in the oilseeds in March and April.

“But it looks like with the larger acreage the market will have a bit of more of a cushion if yields are below average,” he noted.

— Glen Hallick reports for MarketsFarm from Winnipeg. 

The post ICE Canada weekly outlook: Canola continues to be bearish appeared first on Grainews.