USA
April 25, 2023
The good times continue to roll for the canola market in 2023 and beyond.
Although the market is well below the highs of last year, it remains well above the 20-year average of approximately CDN$500/mt on the ICE futures market, notes Clint Munro, Global Lead for Nuseed’s Omega-3 supply chain.
“As of this past January, the consumption of the 2022 Canadian crop is at a rate that would consume the total supply around 10 weeks before the 2023 harvest,” Munro says. “So, the function of the market is to ration the crop by either causing exports to be uncompetitive or reducing domestic crush margins so the crush rate slows.”
Domestic crush margins have been very high for the past two to three years and crushers will be doing everything to keep plants running close to their capacity, he says. As crushers continue to attract canola, basis levels should remain strong which is good news for growers still holding their 2022 crop.
“We would also expect the old crop/new crop spread to remain at an inverse and likely tighten further. This means the July 2023 futures is at a higher price than the November 2023 contract.”
The largest-ever canola crop in Australia of approximately 8 million metric tons will provide export competition during the first half of 2023, according to Munro.
Furthermore, the price of canola is becoming increasingly influenced by energy and renewable fuel mandates. This is supported by the recent decision from the United States Environmental Protection Agency (EPA) that canola oil-based renewable diesel will qualify as an advanced biofuel under the country’s renewable fuel standard.
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