May 6, 2013

 

Canadian rapeseed stocks drop to an eight-year low

 

 

As of March 31, Canadian rapeseed stocks fell 25% to an eight-year low, and wheat supplies also dwindled more than expected.

 

Statistics Canada informed this on Friday (May 3).

 

The thin stocks highlight supply concerns as planting season gets off to a slow start in Western Canada due to cold, wet weather. Canada is the biggest producer and exporter of rapeseed, mainly used to make vegetable oil, and the sixth-largest wheat grower.

Rapeseed supplies on farms and in commercial storage fell to 3.909 million tonnes, just below the lowest estimate in a Reuters trade survey before the report. All-wheat stocks fell 8% to a lower than expected 13.459 million tonnes, the smallest supplies in five years.

 

"There's some big concern. People are talking about continued export demand from China, plus the statistics are certainly showing that the (Canadian rapeseed) crusher continues to eat it up with both hands," said Tony Tryhuk, manager of commodity trading at RBC Dominion Securities, adding he was surprised futures prices were not stronger after the report. "Things are going to be fairly snug."

 

Supplies of US soy, an oilseed competitor to rapeseed, are also tight, and dry conditions are expected to curb Australia's rapeseed output.

 

ICE Canada July rapeseed futures rose modestly after the report, before pulling back. At 9:40 CST July was up US$1.90 at US$602.10 and November was up US$1.80 at US$540.50.

 

Traders surveyed by Reuters had expected, on average, rapeseed stocks of 4.1 million tonnes and all-wheat supplies of 13.9 million tonnes. With supplies so tight, it will be tough for buyers to draw the remaining rapeseed from farmers' hands, said John Duvenaud of Wild Oats Grain Market Advisory, on a conference call organised by the Minneapolis Grain Exchange.

 

Even though wheat supplies are tight, there is no shortage, Duvenaud said.

 

"It's an old saw that when Canada runs out of wheat, that's a real situation," he said, adding that Canada is on course to have ample leftover supplies at the end of the 2012-13 crop year on July 31.

 

In an April 24 report, Statscan said farmers intend to plant the biggest wheat crop in 12 years but sow less rapeseed for the first time since 2006.

 

In Friday's report, Statscan said barley supplies fell 10% to 2.961 million tonnes and oat stocks were down 30% to 1.214 million tonnes, both more than expected. Durum supplies of 2.663 million tonnes were down 14%, in line with expectations.

 

Statscan surveyed farmers from March 25-April 3. It will issue planting estimates on June 25.