China’s ban on Canadian canola means that farmers have to take different strategies this year. Some are planning to store their canola on farm, while others are planning to sell.
“Anything that has been ordered already, companies are honouring those canola contracts,” said Wade Sobkowich, executive director of the Western Grain Elevator Association. “They’re pencilling that grain in, and scheduling deliveries.”
When it comes to new sales, producers have to decide if they want to sell at current prices, which have declined to reflect the new market realities. But grain companies are still buying, said Sobkowich.
“If there’s a slowdown, it’s because of farmers making business decisions to wait and see if they can lock in a price and a delivery period,” he said.
Grain companies are handling the situation in their own way. Sobkowich said he didn’t want to name names, but he knows of some companies that are setting the prices for several months away. They’re also trying to push additional sales into Bangladesh, Pakistan, Mexico, the U.S., and the European Union, which have all previously bought Canadian canola.
“The volumes are limited because China is such a big market, but exporters are trying to make up for a large buyer,” said Sobkowich.
Canola is currently being used to backfill other plant oils. Buyers in China are still in need of oil, but are looking for other varieties to meet their demand. If China buys sunflower oil, for instance, other countries may want to purchase Canada’s canola oil.
“Companies are in a business to make money and so they are searching out the highest-priced markets they can, in this environment,” said Sobkowich. “Hopefully, over time, canola prices will go back up. It’s a very difficult situation and one that is largely out of our control because it seems as though canola is one piece in a geopolitical chess game that involves Canada and China and multiple other countries.”
A waiting game?
Some producers are choosing to store canola on the farm in the hope prices will recover fairly soon.
“If you want to store canola, make sure it’s cool and dry and that you’re monitoring it,” said Keith Gabert, an Innisfail-based agronomist with the Canola Council of Canada. It’s a really valuable commodity. “We would hate to have growers stick an auger in the bin and not have quality grain come out.”
Growers should be fine if they adjust temperatures and moisture levels for long-term storage, said Gabert, adding he’s already had talks with some growers about proper procedures.
“We’ve seen no indication that warming up bins for summer storage is a useful endeavour,” he said. “Continue to monitor it, but there’s no reason to put conditions back into summer storage.
“If you’ve got a cold grain mass, leave it there, and continue to watch and manage it like you would any other valuable commodity in the bin.”
Due to poor weather conditions in September, some of the canola in the province came off with a higher green content.
“In many areas, it was the highest green content that growers had any experience harvesting,” said Gabert. “There is always a little more concern with that material coming off the field.
“When I talk to growers, I like to say it’s a little more alive than they’re used to putting in a grain bin, so that takes additional management.”
Because canola, if not properly managed, can downgrade easily, many are worried about storage issues as the weather continues to warm. However, most are already familiar with storing canola, and shouldn’t have much problem cooling it down, said Gabert.
“The possibility that we’ll have growers hold more grain over in inventory is a real possibility, but I don’t know if it changes any of their practices that they normally would have considered if they were holding grain over for any reason,” he said.
Canola is one of the harder crops to store because of its high oil content and so is a little more difficult to store than a tough cereal grain.
“We know that it’s not the most forgiving crop to store and it takes a little more management. But most growers are already on top of that.”
As far as Gabert has heard, growers are unhappy with the uncertainty of the market, but are not sure what they are going to do about it.
“They know that this is something that will impact canola profits, and they don’t like that.”
If you opt to store and wait, just be proactive, he said.
“If you are keeping grain bins and you’re not entirely confident of what is in those bins, you can move it and take another look or at least partially mark it out of every bin instead of just leaving your bins for last,” he said.