An analyst with MarketsFarm says canola crusher are still highly motivated to buy even though the price of seed has reached record levels following an extensive drought in Western Canada.
“Downstream users, such as food processors , have multi-year contracts with crushers,” said Mike Jubinville. “Regardless of crush margins, they have to fulfill those contracts. In some cases, there will be negative crush margins for a period of time and that has happened in the past.”
Jubinville estimates Canadian canola crush will be 9.4 million tonnes—less than the 10 million plus in the past couple of years. However, the big decline will be in canola exports. The forecast is below half of the usual 10 million tonnes, somewhere in the 4 to 4.5 million tonne range.
Canola ending stocks will be at the bare minimum of approximately 650,000 tonnes.
Statistics Canada will release its final crop estimates on December 3rd. Jubinville projects the last estimate of 12.8 million tonnes will likely be reduced.
