May 7, 2012

 

Canada's rapeseed stocks down to four-year low
 

 

Highlighting the tight supplies that have driven nearby rapeseed futures to a whopping premium over new-crop contracts, Canadian stocks of rapeseed dwindled to a four-year low on March 31, according to a Reuters poll of 13 traders and analysts.

 

Rapeseed stocks were 4.7 million tonnes combining commercial and on-farm stocks, traders said on average ahead of Monday's (Apr 30) report by Statistics Canada, down 24% from last year.

 

The Statscan report on March 31 stocks often generates lukewarm interest among analysts, but this year it may confirm why rapeseed prices soared to a nearly four-year high last week.

 

"It just tells you the Chinese demand is a lot bigger than what people anticipated," said Don Roberts, an analyst at Canolainsight.com. "We're crushing to beat the band and exporting like crazy."

 

Supplies of other major crops such as wheat, durum, oats and barley were also lower after spring flooding curbed the size of last year's crops, but more modestly than rapeseed.

 

The trade survey pegged all-wheat stocks at 14.9 million tonnes, down 6% from last year, and durum supplies at 2.9 million tonnes, down 5%.

 

Oat stocks slipped an estimated 11% to 1.5 million tonnes, which would be an eight-year low, and barley supplies dropped 10% to 3.2 million tonnes, the poll projected.

 

Demand for rapeseed comes mainly from export and domestic markets for vegetable oil, used in foods like salad dressings and margarine. Some of those markets are relying more this year on rapeseed in light of weather-related damage to crops of rapeseed in Europe and soy in South America.

 

Canadian rapeseed oil exports and domestic crushing volumes are both on a brisk pace in the current 2011-12 crop marketing year, which will leave thin supplies by the end of the crop year July 31, analysts said.

 

"With the pace of demand we've had, we'll basically run out of rapeseed," said Jonathon Driedger, analyst at FarmLink Marketing Solutions.

 

The front-month ICE Canada rapeseed futures contract soared to a nearly four-year high last week on a continuous chart, while old-crop July traded at a US$59 premium over the new-crop November contract to mark the highest since October 2010.

 

Farmers are expected to respond strongly to high prices by planting a record-large acreage of as many as 22 million acres.