Canola prices jumped on the first trading day of the new year as concerns about dry weather in Argentina continue to mount, even though weekend rains sparked some liquidation in other oilseeds and grains. Prices have firmed as the weather in Argentina has been the driest in over 30 years. Crop estimates for Argentina continue to be cut by analysts. However, weak crude oil price action on January 4 caused weakness across the entire ag sector, leading to longs exiting the markets.
Canola prices have increased in the last month, but remain in a tight trading range between $800/MT and $900/MT.
The USDA, in its latest Oilseed Crushings Report, said 180,750 tons of canola seeds were crushed in the U.S. for oil in November, down from 208,459 tons in October, but up from 160,000 tons or 12.5% from November 2021. Total canola oil stocks remained strong at 170,871 tons at the end of November. In Canada, the Canadian Oilseed Processors Association (COPA) reported that canola crush for the month of November was 877,405 MT, also up 12% from the same period in 2021.
Market analysts indicate that at the current usage rates of canola in North America, the market will run out of canola before the end of the marketing year, suggesting that either crush or exports will have to be reduced along the way this spring. Exports will be the first to be cut. The oil value represents 88% of the crush value in canola and crush margins remain very strong, suggesting crushers have more pricing power than exporters.
The U.S. Energy Information Administration reported in the latest Monthly Biofuels Update that a record 166 million pounds of canola oil was used in biofuel production in October. Higher amounts are expected in coming months and this data will be watched closely.
The March ICE canola contract finished at $869/MT on January 4, lower on the day but up $12/MT in the last two weeks and up $28/MT since December 1. The May canola contract ended at $866/MT, down $1.20/MT on the day, but also up $12/MT in the last two weeks and up $22/MT since December 1.
As of January 4, prices at nearby crush plants ranged from $28.24 to $30.40/cwt. for Jan deliveries and $29.09 to $30.40 for Feb and Mar deliveries, up $.40 - $.50 in the last two weeks.
The Northern Canola Growers Association will hold a grower educational meeting in the Seminar Room at this year’s KMOT Ag Expo in Minot on Wednesday, January 25th at 1:00 PM. The meeting will consist of a weed control update in canola and a discussion of new research findings in controlling flea beetles in canola, including new product research. Canola growers are encouraged to attend this important update.
NDSU will also host a Getting it Right in Canola Production virtual meeting on March 9. Getting It Right is an annual crop production conference featuring the latest research-based production information presented by NDSU specialists. Canola growers can go to northerncanola.com to register for the virtual conference.