Watching the markets
Canola markets look promising but could be affected by economic uncertainty. By D’Arce McMillan Farm Management Editor
W
ith a record production and high prices, Western Canada’s canola crop can be called golden for more reasons than just its colour. It should generate record income to pad producers’ bank accounts this year. The risk to that assessment is the precarious condition of the world economy, struggling with huge government debts in the European Union and the United States, high unemployment and industrial sectors in the developed world that appear to be paralyzed by uncertainty. If major economies trip into recession again there could be a price collapse similar to 2008. The global economy remains fragile. On the other hand, if the economy does not tank, there is potential for oilseed prices to rise if a redeveloping La Nina causes drought in South America’s soybean growing regions. Already, the United States Department of Agriculture and other forecasters believe that global oilseed consumption will outpace production this year. If drought shaves South American production below what the USDA anticipates, prices would climb to limit demand. However, as of early November the La Nina hadn’t delivered dry weather to South America and planting was proceeding rapidly with good moisture.
Growers beat the weather
After a challenging start to the 2011-12 season, Prairie farmers seeded 18.64 million acres of canola, an increase of about six percent over 2010.
CANOLA & Pulse 2011
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Statistics Canada’s September produccant increases in seed exports to Pakistan tion estimate pegged the new crop at a and the United Arab Emirates. record 12.93 million tonnes, a 1.2 percent The latter imported 819,000 tonnes of increase over the year before. Many Canadian canola, up almost 80 percent, analysts think that forecast will increase in a three-way trade route that includes in the November report, to be released in Europe. The UAE imports the seed, early December. crushes it and exports the oil to Europe. The 2011 average yield estimate is 31.7 Direct trade with Europe is also rebushels per acre, down from 33.3 bu. the covering after years of being shut down year before due to weaker performance in because of European bans on GM seed. Manitoba and Alberta. Last year, Europe imported 282,000 Because stocks at the beginning of tonnes of seed, up from just 95,000 2011-12 were smaller than at the same tonnes the year before. Oil exports to the time last year, total supply of canola this EU climbed to about 143,000 tonnes, up year will be smaller than last year. from just 18,000 the year before. Agriculture Canada forecasts a slight Prospects for EU trade are even better decrease in exports and increase in this year. Europe had a small crop and domestic use. Combined exports and needs to increase imports to serve its domestic use should exceed production, large biofuel industry. leading to a forecast for reduced year-end Europe recently implemented rules stocks or 1.15 million tonnes. setting out environmental standards for That provides solid footing for a forecast production of biodiesel feedstock. of strong prices. Canadian producers are now being Agriculture Canada’s assessment for certified to meet those standards and that fairly robust exports is well supported. Pulse grower for over 20 years Japan and Mexico Red Lentils should continue to be –CDC Imax (new) –Kind Red (KR) new solid buyers. –CDC Maxim The trade situation Green Lentils with China appears to –CDC Invincible (new) Impower (new) have stabilized with Sopatyk Seed Farms is your –CDC –Queen Green (QG) that country buypremium seed supplier for cereals, pulses and specialty Peas and Chick Peas ing more canola oil Meadow crops. Option to pick up at –CDC –CDC Patrick (green) to make up for the seeding available. –B-90 Amit Chick Peas restrictions on seed Midge Resistant Cereals trade associated with –AC Unity China’s concerns over –AC Shaw (306) 227-7867 blackleg. Ask about other varieties spats@shaw.ca and seed options. Last year saw signifi-