Canola Ending Stocks

[crusher]

I noticed on the latest report from Agriculture and Agrifood Canada that many stocks were lowered from one month ago. Of particular note was the 02/03 ending stock of canola of 460,000 tonnes. The ending stocks shown in the Alberta Ag projection in May was 627,000. I've was hauling to the local crusher lately and they are the busiest they have been in a year. Over the last month ADM Lloydminister has had some very attractive basis levels. Meanwhile the old crop/new crop spread has narrowed in $25/tonne. Any predictions on how this is going to shake out? Seems like most of the prairies are in reasonable shape, moisture wise. I'm thinking that old crop should show some improvement over new crop, but it isn't happening.

[charliep]

I reviewed the canola S&D and changed to bring more into line with AAFC one. 460,000 tonnes of July 31 canola carryout is more than adequate to cover old crop needs. My thoughts are ADM and some of the others will push hard now to get as much canola into the system to satisfy their summer crush. When they have run through this stuff, they will shut down for summer maintenance. Any rally in canola will have to be supported by something happening in new crop (eg. weather probems or a major drop in the loonie relative to the US buck).

Just a comment that soybeans over $6/bu are being supported by a continued tremendous demand scenario and a relatively tight US old crop carryover. New crop does have at least some weather premium in it. The question (assuming no weather problems in US mid west) is whether this robust demand can keep growing enough in the face of increasing world soybean production.