Canada’s canola supply grows tighter

It is highly unusual to see a red number in the sea of black on Agriculture Canada’s monthly Grains and Oilseeds Supply and Disposition report.

But it happened in the May report when the department penciled in minus 609,000 tonnes for its canola feed, waste and dockage (FWD) number for the current crop year.

The negative number is the result of Agriculture Canada upping its 2024-25 exports to 8.5 million tonnes from its April forecast of 7.5 million tonnes.

It had to do that because actual exports were 8.01 million tonnes through week 40 of the crop year.

That extra one million tonnes of exports had to come from somewhere on the balance sheet, so the deparatment took it from FWD, forcing it into the red.

“This is expected to be updated, pending revisions from Statistics Canada in upcoming releases,” Agriculture Canada stated in its May 21 report.

Reading the tea leaves, Agriculture Canada is suggesting that Statistics Canada will be revising past production numbers higher to come up with more supply, pushing the FWD number back into the black.

However, some analysts don’t think that is the right approach.

“The problem with that theory is the extremely tight March 31 canola stocks report,” DTN contributing Canadian grains analysts Mitch Miller said in a recent article.

That number came in at 5.87 million tonnes, compared to 9.58 million tonnes the same time last year.

If past production was understated, the March 31 stocks should have been more comfortable instead of the second lowest level since 2013, said Miller.

“So, what if it’s Agriculture Canada that has to do the revisions?” he wondered.

To get the FWD number back in the black, it would have to come from another column on the balance sheet.

“That would mean ending stocks falling roughly in half from the current 1.3 million tonne estimate and more in line with market price and basis strength,” said Miller.

He also noted that exports will have to average 40,800 tonnes per week for the remaining 12 weeks of the marketing year to meet Agriculture Canada’s new forecast.

That seems low given that 130,000 tonnes were shipped in week 40. So, Agriculture Canada may have to hike its export forecast even higher, which could further deplete ending stocks.

Doug Hoffus, a farmer from Bjorkdale, Sask., said Miller’s analysis that supplies are tighter than the government is estimating rings true.

“That’s exactly what I’m thinking,” he said.

“It’s not scientific and it’s not analytical, (but) my gut is telling me that it’s short.”

In the past few weeks, he has been approached by two line companies and a crusher to sell his unpriced canola. That hasn’t happened in recent memory.

Hoffus has been told by local grain reps that there’s not much grain left to price in northeastern Saskatchewan.

“We don’t have the supplies out in the country because of sheer demand from the line companies and the crushers,” he said.

“They’re very aggressive. That’s what I’m going by.”

He wonders where prices could head if it turns into a weather market. That is a distinct possibility given that the northern half of the province is short moisture.

Hoffus had enough in the ground to provide good germination on his farm, but he knows of others who were not as fortunate.

He believes it is “absolutely necessary” that the region receives 25 to 50 millimetres of rain by mid-June or it could get interesting.

“In the next couple of weeks things could start to really ratchet,” said Hoffus.

Farmers may also want to keep an eye on Ukraine, which is one of Canada’s top competitors in the canola market.

The U.S. Department of Agriculture is forecasting 3.7 million tonnes of production in that country in 2025-26.

Grain Trade, a Ukrainian electronic grain exchange, believes that is way too optimistic.

The Ukrainian agriculture consultancy firm thinks seeded acreage of winter canola is smaller than the USDA is forecasting due to dry conditions in August and September.

“And the dry and frosty weather in March and April led to significant crop losses,” said the firm.

Grain Trade believes Ukraine will produce only two to 2.5 million tonnes of the oilseed.

Tags: Ukraine, exports, canola, Canada, ending stocks, Production, demand