Smoke from wildfires may have proved a curse this year for one oilseed, palm oil – but looks like it played a role in a bumper crop of another, canola.
A surprisingly strong Canadian canola harvest figure of 17.23m tonnes revealed in official data earlier this month was in part due to “new and higher yielding varieties”, and to a “long and dry fall which supported the harvest, Canada’s farm ministry, AAFC said.
However, the strong production figure, which came in well above the 15.6m tonnes that investors were expecting at the time, also looks to have been down to the benefit of a shield provided by smoke against summer heat.
“Anecdotal reports suggest yields were also helped by widespread smoke which blocked the sun and lowered temperatures a few degrees during the critical flowering period,” the ministry said, with this phase sensitive to heat.
The comments follow a summer which was marked by widespread forest fires reported in the likes of Alberta and Saskatchewan, major ag producing states, as well as in Alaska.
Latest official data, released in September, showed the number of Canadian wildfires in 2015 having topped 6,600, 26% above the average amount, covering 3.95m hectares – 89% more than the typical area.
And the comments contrast with the concerns over the fires earlier this year in South East Asia which, in blocking photosynthesis, are seen as fuelling a downturn in production expected for next year, blamed primarily on dryness caused by the El Nino weather pattern.
Record demand too
AAFC confirmed that the strong harvest, coupled with ample carryover stocks, had left Canada with a record 19.7m tonnes in supplies – 3m tonnes above the ministry’s estimate last month.
However, “usage is also forecast to hit a record high”, helped by extra domestic crushing capacity, and margins being supported by weakness in the Canadian dollar, which has spurred export demand for crushing products canola oil and canola meal, besides for the oilseed itself.
“Exports of canola are also forecast at a record 9.5m tonnes… based on a cautious extension of the pace to date”.
The dynamics mean that Canada’s canola stocks will, on AAFC estimates, shrink by 25% to 1.75m tonnes over 2015-16 – rather than soar to 3.0m tonnes as forecast by the US Department of Agriculture, whose data set world benchmarks.
“This marks the third year of continuously tightening carry-out stocks from the record set in 2013-14,” AAFC said.
It nudged lower to Can$490-520 a tonne, from Can$495-525 a tonne, its forecast for the average canola price in Vancouver in 2015-16, although still marginally above last season’s Can$489 a tonne.
“The lower Canadian dollar is allowing [Canadian] canola to compete against burdensome supplies of soybeans, soyoil and palm oil, and soymeal.”
‘Futures show strength’
G3, the Canadian grain handling giant formerly known as CWB, last week raised by Can$6 to $512 a tonne its estimate of returns for farmers selling crop into its canola pool.
“Canola futures continue to show strength… as a result of stronger than expected Canadian export and crush demand,” G3 said.
“Despite the weakness in palm and bean oil futures, which is pushing US soybean futures weaker, the weaker Canadian dollar continues to offset these losses.
(Source – http://www.agrimoney.com/news/wildfire-smoke-handed-canada-its-bumper-canola-harvest–9131.html)