Canadian canola values continue to slide on the back of slower than desired exports. Domestic canola crush in Canada remains good, around 300kt better than the accumulated amount for this time last year. This volume is not enough to counter slower exports though.
There was some talk in October that EU canola had actually been imported to Canada to be crushed. This is potentially feasible given the huge premium to other exporting countries that Canadian canola is at the moment. For instance French rapeseed could move into China for roughly AUD$15 less than Aussie canola and Aussie canola into China is roughly AUD$120 less than Canadian canola.
This rough analysis may be telling me two things. One, that Canadian basis should push lower in the short to mid term as Canadian values have further to fall than other exporting countries, like the EU, Ukraine and Australia.
It also tells me that Australian basis to EU prices could also fall a little further, not a huge amount as our quality is shaping up as very good this year, but the $15 premium Aussie canola is currently showing over EU canola may not last. If we were to see local values give that premium back it would indicate basis at something close to $80 under Paris. This time last year basis to Paris was closer to $180 under, so that level of basis isn’t unheard of.
The main underlying support for world oilseeds is the poor sowing weather being seen across parts of the major soybean producing region in Brazil and Argentina. The current estimates for Brazilian beans in 2023-24 is 163mt that’s huge, but that estimate will not be met if current weather conditions persist. Soybean sowing in Brazil goes through October to December.
US hard red winter wheat values out of the Pacific Northwest continue to slide in order to compete with the better wheat coming out of Western Australia that is currently some US$33 better value than the US HRWW. WA H2 is some AUD$40 cheaper than NTL / BNE due to drought in NNSW & QLD.