Cold and wet weather in Canada is delaying canola planting, which is supporting canola prices in the EU. Meanwhile, rainfall in Australia is improving prospects for their upcoming canola crop.
Delayed Planting in Canada
Cold and wet conditions in Canada have significantly delayed canola planting. As of May 20, only 56% of the planned acreage in Saskatchewan and 58% in Alberta had been planted. This is a decrease compared to the 68% and 62% planted at this time last year, respectively.
Weather Impact
Cyclones are expected to bring more rain to the Canadian prairies next week. While this will help replenish soil moisture, it will also further slow down the seeding process. Despite the delays, these weather conditions are supporting canola and canola exchange prices.
Price Movements
On the Winnipeg exchange this week, July canola futures increased by 0.9% to CAD 672/t or $489/t, showing an 8.7% rise for the month. November futures also rose by 0.7% to CAD 693/t or $505/t, reflecting a 9.1% monthly increase and a 12.7% rise over the year.
Soybean Planting Influence
An acceleration in US soybean plantings is pushing down soybean prices, which is adding pressure to canola prices. This is occurring amidst strong old-crop stocks and an increase in Canadian plantings.
EU Rapeseed Yield Forecast
Additional support for rapeseed prices came from MARS experts, who in their May report lowered the forecast for EU rapeseed yields from 3.26 to 3.21 t/ha. However, this is still higher than last year’s yield of 3.18 t/ha.
On the MATIF exchange in Paris, August rapeseed futures reached their highest level since March 2023 at €495/t, before settling at €492.5/t or $532/t, showing a 0.9% weekly increase and an 18% rise over the year.
EU Import Data
In the 2023/24 fiscal year as of May 3, the EU imported only 4.9 million tons of rapeseed, which is 38% less than the previous year’s corresponding period.
Ukrainian Crop Conditions
Recent light rains in Ukraine have improved crop conditions and yield potential. Experts predict that rapeseed harvesting in the south of the country will start earlier than usual, around June 8-15, increasing the supply to the EU market.
Export prices for new crop rapeseed have risen to $430-450/t with delivery to Black Sea ports and €460-470/t with delivery to Germany in August-September.
Australian Crop Prospects
Rain in Australia’s main canola-growing regions is enhancing crop prospects, ensuring that farmers will not reduce canola acreage in favor of wheat or barley. The planting data from Canada and Australia will significantly influence market quotes in the coming weeks.
The interplay between weather conditions in major canola-producing regions and the planting delays in Canada are key factors driving current market trends. The upcoming weeks will be critical in determining the direction of canola prices, especially as new data emerges from both Canada and Australia. Stakeholders should closely monitor these developments to make informed decisions in this volatile market environment.