Rapeseed Stocks In Major Exporters’ ‘To Hit Highest In At Least A Decade’

(Agrimoney) –  A rise in production of rapeseed will drive major exporters’ stocks – particularly important for pricing – to the highest in at least a decade, the International Grains Council said, although debate surrounds Canada’s harvest prospects.

The International Grains Council, in its first forecasts for world production of rapeseed, including canola, in 2018-19, pegged output at 75.6m tonnes – up 900,000 tonnes year on year, and a record high.

Consumption will rise even faster, by 1.7m tonnes to 75.8m tonnes, taking it back above production, and meaning a return in world canola inventories overall to decline, of 300,000 tonnes to 5.3m tonnes.

However, this shrinkage will be focused on importing nations, and notably China, where stocks are seen more than halving from the 1.1m tonnes forecast for the end of 2017-18, to their lowest in years.

European Union inventories are expected to drop too, by some 300,000 tonnes to a multi-year low of 800,000 tonnes.

Exporters’ inventories swell

In the three major exporting countries, Australia, Canada and Ukraine, inventories will end next season at 3.1m tonnes, the IGC said, the biggest total on data going back to 2009-10.

“Assuming larger crops, especially in Canada, the total for the major exporters is seen rising by around one-quarter year on year… to well above the recent average,” the council said.

Levels of crops held in exporting countries are viewed with particular interest by investors as, being readily available to the world market, such stocks tend to be highly influential in pricing.

‘Stiff competition’

However, the IGC forecast assumes growth of 400,000 tonnes to a record 21.7m tonnes in output in Canada, by far the biggest rapeseed/canola exporter, a figure which while in line with that from Canada’s own farm ministry is above that of the US Department of Agriculture officials.

Canada’s farmers are expected to “boost acreage amid perceived attractive returns and prospects for elevated traded volumes”, the council said.

“The overall increase in area is expected to more than offset a return to average yields.”

The forecast came as Canada’s agriculture ministry, AAFC, restated a forecast of growth of 423,000 hectares, to 9.73m hectares, in the country’s canola sowings “due to attractive expected returns compared to alternative field crops”.

But, with “stiff competition from the burdensome world supply of oilseeds” limiting growth in exports, the ministry forecast Canada’s canola stocks ending 2018-19 up 250,000 tonnes at 2.25m tonnes.

‘Potentially damaging’

By contrast, the USDA’s Ottawa bureau earlier this week forecast Canada’s canola stocks ending 2018-19 at 1.40m tonnes, an estimate based in part of an idea of a fall in the country’s harvest this year, by more than 800,000 tonnes to 20.5m tonnes.

The bureau flagged in part a dent to yield prospects from shortfalls of 40-60% in winter rainfall in the Prairies, raising the prospect of a “drier seeding period than last year”.

“While 40-60% wouldn’t be significantly detrimental to the coming growing season in an average year, it’s potentially damaging to areas like central Saskatchewan that received only 40-60% of average precipitation in the previous growing season.”

Disease, tariffs

The bureau also flagged a potential setback from the spread of clubroot, a fungal disease, whcihis being encouraged by a lack of rotation on some farms, given the favourable returns from canola compared with other crops.

“Despite the fact that clubroot results in lower yields, Alberta producers have been extending canola planting years and delaying traditional crop rotations, in part, because a low-yielding canola crop can earn more than a good-yielding wheat crop.”

The dent to prospects for returns from some pulses, after Indian import tariffs, may also underpin canola area.

“Indian tariffs on peas and lentils imposed in September 2017 and in December 2017 may boost area seeded to canola, if prices of peas and lentils deteriorate,” the bureau said.