Glacier FarmMedia — Statistics Canada will release its principal field crop estimates on Dec. 4 and traders are anticipating a larger canola production estimate than the 20.03 million tonnes published in September.
With some estimates surpassing 22 million tonnes, canola futures on the Intercontinental Exchange suffered double-digit losses on Dec. 3. The January contract lost C$15.60 per tonne at C$629.20 on Dec. 3, its lowest close since Oct. 22, contributing to a weekly decline of C$22.50.
Phil Speiss from RBC Dominion Securities in Winnipeg said canola production will exceed 21 million tonnes, but the price drop indicates the trade is anticipating an estimate of 22 million or more.
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Calling for bigger crops ahead of StatCan report
Statistics Canada will release its first survey-based production estimates for the 2025/26 crop year on Dec. 4, with general expectations for upward revisions to most major crops from the model-based estimates in September. However, as StatCan has shown a tendency to underestimate production in its December reports, many analysts expect actual production may be revised upward in subsequent reports.
“At the end of the day, 21 (million)-plus is the number,” he said. “Hopefully, the farmers’ survey supports that. But we’ll have another 12 to 24 months of uncertainty if StatCan low-balls the number like they did last year.”
Reported yields of 45 bushels per acre or greater in key canola-growing areas, as well as cooler temperatures and timely moisture in the summer on the Prairies, are reasons for the trade expecting a production increase. However, Speiss said canola prices were due for a correction owing to recent behaviour by the speculative funds.
“Part of this last little (rally) has probably been fund-driven because they were so short,” he explained. “Now that you’ve exhausted that short-covering from the spec side of things, the market has little floor left to it and the technicals start to take over.”
Large crops in Europe and Australia, as well as China maintaining its tariffs on Canadian canola, is only leading to more pressure on the oilseed’s market, Speiss added.
Barring any large price shifts in crude or vegetable oils, he believes January canola can move to as low as C$620/tonne.
“After that, we’ll see from there,” he said.
