May 8, 2012

 

Canada's rapeseed stocks down to seven-year low

 

 

As demand from crushers and exports winnowed down supplies, Canada's rapeseed stocks fell by nearly one-third to a seven-year low as of March 31, Statistics Canada said Monday (May 7).

 

Rapeseed stocks in commercial storage and farm bins fell to 4.3 million tonnes from last year's 6.2 million tonnes, coming in at the low end of a range of trade expectations.

 

"It makes everybody nervous, but I think it is manageable," said agriculture analyst Greg Kostal on a conference call hosted by Minneapolis Grain Exchange (MGEX) to discuss the report.

 

Demand for rapeseed - used mainly as a vegetable oil in salad dressings and margarine - typically drops off in the last months of a crop marketing year as end-users wait for the first supplies of the next harvest, said Ken Ball, commodity broker at Union Securities.

 

"That does assume a good new crop underway, which isn't a guarantee."

 

Canada's crop marketing year runs from August 1 to July 31, and farmers are expected to plant a record-large rapeseed area for harvesting this autumn.

 

Old-crop July ICE Canada rapeseed futures rose modestly after the report, before slipping back as grains and crude oil sold off. July rapeseed has traded for months at a large premium over the November contract due to tight supplies.

 

For other crops, major flooding last spring in Manitoba and Saskatchewan took millions of acres out of production, reducing the size of the harvest.

 

All-wheat stocks slid to 14.5 million tonnes from 15.8 million tonnes a year earlier, dropping to a four-year low and the low end of trade expectations. Oat supplies totalled 1.3 million tonnes - a nine-year low - down from 1.7 million tonnes.

 

"I don't think this Statcan report is going to change the direction of wheat (prices)," Kostal said.

 

MGEX September spring wheat futures have fallen steadily this month, as US farmers make quick planting progress and with no major flooding concerns this year in Western Canada. September spring wheat eased in early trading on Monday.

 

Some parts of the Canadian Prairies have received significant rain in the past week, however, and Kostal said moisture levels may get more attention with farmers trying to plant.

 

Barley stocks dropped 11% to 3.1 million tonnes, the lowest in more than 30 years but within a range of trade estimates, and durum supplies dipped slightly to three million tonnes.

 

Traders surveyed by Reuters had expected, on average, rapeseed stocks of 4.7 million tonnes, all-wheat supplies of 14.9 million tonnes and 1.5 million tonnes of oats.

 

Statscan surveyed 13,432 farmers across the country from March 23-30. The government agency will estimate the area seeded to major crops this spring on June 27 and the July 31 crop stocks on September 7.