The supply-demand numbers may not have changed from last month, but 2023-24 and 2024-25 canola price expectations certainly did.
Agriculture Canada’s monthly supply-demand update on Friday forecast the average canola price for the 2023-24 marketing year at $705/tonne, up $20 from March. The new-crop price outlook was bumped higher as well, up $50/tonne from last month to $675 (No. 1 Canada, cash, Track Vancouver).
Although stronger, this month’s revised price forecasts remain below the 2022-23 average of $857, as well as the five-year average of $729.
Ag Canada provided no explanation for the higher price forecasts in its accompanying commentary, with projected 2023-24 and 2024-25 canola ending stocks steady from last month at 2 million and 1.65 million tonnes, respectively, both up from 1.506 million in 2022-23.
After trading below $590 in late February, the July canola contract moved mostly higher throughout March, peaking at about $660/tonne. However, the market has softened more recently and is now just below $630. The new-crop November future is trading around $640.
Weakness in soybean oil weighed on canola this past week, but the market also remains under pressure from weak export demand. Through week 36 of the 2023 marketing year, cumulative canola exports stood at just 4.24 million tonnes, down about 32% from 6.25 million the previous year.
Looking ahead to 2024-25 Ag Canada said there are several variables that will impact canola prices, including weather – both in the Prairies and the US - as well as the Brazil soybean harvest and export pace, the strength of Chinese, Japanese, and Mexican buying, and the domestic crush and export pace.
In contrast to the upward revision in canola prices, Ag Canada lowered its outlook for old- and new-crop durum. The average durum price for 2023-24 is now projected by Ag Canada at $450/tonne, down $15 from March, while the average 2024-25 price is seen at $350, a decline of $25 (No. 1 CWAD 13% protein, average SK producer spot price).
As with canola, the durum supply-demand estimates were unchanged from last month, with 2023-24 and 2024-25 ending stocks holding at 450,000 and 750,000 tonnes, versus 409,000 in 2022-23.
Ag Canada attributed the cut in the 2023-24 durum price forecast to “ongoing sluggish demand and competitive pressure from other suppliers.” However, it said there may be upside in 2024-25 prices if Canadian and global supplies are not realized.
Canadian and US acreage reports have shown producers on both sides of the border intend to sharply increase durum acreage this spring.
The price forecast for wheat (excl durum) was little changed from last month, with the projection for 2023-24 down $5 at $325/tonne, and 2024-25 down $10 at $310 (No. 1 CWRS 13.5% protein average SK producer spot price.
