Could a drop in Canadian canola area support rapeseed prices? Grain market daily

• The Nov-22 UK feed wheat futures closed at £260.50/t yesterday, down £6.50/t from Monday’s close. This movement followed European markets which also recorded a similar loss. Paris milling wheat (Dec-22) closed €13.75/t down from Monday, closing at €322.00/t.
• Global wheat markets continue to feel harvest pressure, with combines rolling across the Northern Hemisphere. Canada’s nine-year high wheat area for harvest 22 reported yesterday also contributed to some price losses.
• Recessionary concerns continue to put pressure on oilseed markets. The Paris rapeseed Nov-22 contract recorded a €3.25/t loss over yesterday’s session, closing at €663.75/t. ov-22 Chicago soybeans futures lost $29.11/t over the Independence Day weekend (Fri-Tues), closing at $483.50/t yesterday.

As one of the world’s largest rapeseed producers, the area planted to canola (rapeseed) in Canada impacts global rapeseed prices. According to latest data released from StatsCan yesterday, Canadian farmers planted 4.7% less canola this season compared with last. So, what could this mean for rapeseed prices going forward?

Yesterday’s report pegged canola plantings for harvest 2022 at 8.7Mha. While this is down 430Kha from last year, harvest 22 plantings are just above the Refinitiv trade estimate of 8.6Mha, and only 258Kha below the previous 5-year average (2017 – 2021). As this fall in area had already been factored into markets, the reduction in area on the year cushioned the fall in rapeseed prices yesterday, rather than leading to support.

Now, oilseed markets are being weighed down by movements in crude oil prices as well as broader economic concerns. While earlier on in the season strong export demand was cushioning any price falls, this no longer seems to be the case, as demand has weakened.      

It’s important to point out that a higher acreage doesn’t always mean higher production. Last year’s production figure was much below previous seasons at 12.6Mt, even though the planted area was at 9.1Mha. Lower production was caused by severe drought in the country. Weather is currently a watchpoint as the canola crop heads into its flowering stage, making plants sensitive to moisture and temperature stresses.

While canola plantings are down this year, production will depend on weather conditions and yield establishment. If Canada has similar problems to last year, global supply of rapeseed will be even tighter than expected. However, if yields are more typical, then Canadian production may see a rise year-on-year and boost global rapeseed supply.

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