Canola futures are taking on the chin today, down 8.20-8.40 at the close. I have had a chance to go through numbers in more detail now, and market action probably has it right….sorry to bear bad news. StatsCan revised seeded and harvested acres for 2013 up by approx. 300,000 acres. Don’t think many had their eye on the 2013 acres! If that isn’t bad enough they also revised the 2013 yield higher by 0.6bpa. For 2014 they also added acres, around 325,000 of them. These revisions must not have felt like enough so they went on to add 0.7bpa to 2014 as well.
These are some pretty brutal adjustments to make, and with harvest underway expect more than one panic sale. The good news in the numbers is that StatsCan also acknowledged better than expected exports (see weak Loonie) and increased their domestic use due to new crush capacity and good crush margins. These revisions to the demand side amounted to positive 1.25 million mt which offset a large part of the supply increases. Net adjustments we are looking at a 2.3 million mt carry-out for 2014/15 which is down 700k from 13/14, but 300K above guesses going in.
When I extend these numbers to 2015/16 forecast I added domestic demand, but still have my exports down 10% due to Chinese fears and required demand rationing. I am using a 33.1bpa yield vs most analysts around 31bpa. My S&D is not as Bullish as it was in late June/early July, but demand rationing still required to keep carry-out over 1 million mt.
I am disappointed by these numbers, but am not feeling any panic. Time is still on our side for the 2015 crop marketing year.
|Seeded Acres ‘000||20255.8||20774.6||19839.7|
|Harvested Acres ‘000||20160.1||20618.1||19326.3|
|Production (‘000 MT)||18551.0||16410.1||14508.3|
|Imports (‘000 MT)||66.1||65.0||117.8|
|Total beginning stocks (‘000 MT)||588.1||3008.0||2321.7|
|Total supplies (‘000 MT)||19205.2||19483.1||16947.8|
|Total domestic use (‘000 MT)||7101.6||8030.4||8050.0|
|Total exports (‘000 MT)||9095.6||9131.0||7425.0|
|Total demand (‘000 MT)||16197.2||17161.4||15475.0|
|Total ending stocks (‘000 MT)||3008.0||2321.7||1472.8|
|Source: StatsCan and DLN AgVentures|