Canada Markets

Counting on a significant oilseed rally this upcoming year may be a tall order for the 2014/15 crop year given the global oilseed situation. Of the seven major oilseeds tracked by the United States Department of Agriculture, production is expected to increase 4.6% or 23.16 million metric tonnes, as indicated in last week's supply and demand report, to 528.38 million metric tonnes. The good news is that the rate of growth is slowing, with the growth in production of the seven oilseeds growing by an average of 6.4% over the past two years while slipping to 4.6% in 2014/15.

The bad news is that the carryout, or ending stocks, of the seven major oilseeds is growing at a much faster pace. This carryout grew 2.8% to 67.3 mmt in 2012/13, growing 19.1% to an estimated 80.15 mmt in 2013/14 while the latest projections suggest a 29.2% increase to an estimated 103.59 mmt in 2014/15.

Of the seven oilseeds shown, 2014/15 production levels in five of the oilseeds are actually forecast to result in a year-over-year drop in production, including rapeseed. The largest growth is seen in soybean production, where production is expected to jump by 26.19 mmt, or 9.2%, from the estimated production in 2013/14. This includes a year-over-year jump of 15.5 mmt in U.S. production, soon to be harvested, while Brazil's production, based on crop currently being seeded, is expected to grow by 7.3 mmt to 94 mmt. Will this be realized? Monday's Crop Progress report suggests that 40% of the total U.S. crop has been harvested, down from the five-year average of 53%, which has traders on edge. As well, central Brazil is facing dryness which is slowing seeding progress.

Projections for rapeseed/canola production would suggest a slight 1.1% decrease in global production to 70.31 mmt in 2014/15. While Canada's production is expected to fall by 3.560 mmt to 14.6 mmt, according to the USDA, modest gains in production are expected in both China and India while production is expected to increase by 2.4 mmt in the EU. Added to the 6.244 mmt carried out of 2013/14, which was 55% higher than the previous year, along with a modest 1.75% increase in global consumption, results in an increase in ending stocks to a record 6.483 mmt.

DTN 360 Poll

This week we ask if you are done or when you expect to be done harvesting. You can weigh in with your thoughts on DTN's 360 Poll on the DTN Home Page.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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(AG)

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