June Canola Crush Hits Another Record
June canola crush totaled 864,559 tonnes, which was the largest June crush total on record and up from the previous two months. Year to date, crush is running 10 percent ahead of last year. We will hit a record crush volume for the crop year as the cumulative total for August to June 2019/20 is already larger than historical crop year totals, and we still have not received July data.
Daily crush rates picked up for the month. While not a record, the average daily crush rate was the highest since December. That comes despite margins being under pressure versus levels earlier this crop year, but that is a representation of the industry rather than actual information about each processing facility’s profit situation. Another reason crush remains strong is due to exports. From August to May, exports are running 7 percent ahead of the previous crop year. Meal exports from August to May total 4.1 million tonnes versus 3.8 million in 2018/19. The U.S. remains the top destination, but meal exports to China are up 6 percent versus last year.
What could July have in store?
Crush is expected to remain strong for July. Historically, we see a rise in monthly crush from June to July with part of the reason being because there are 31 days in July. Assuming history repeats itself, July crush could come in around 970,000 tonnes, which would mean final crush would be near 10.3 million tonnes for the crop year. But let’s assume that crush comes in at the lowest volume recorded for this crop year, as some in the market are still convinced the crush industry is under pressure. If so, final crop year crush would still total 10.1 million tonnes. Both scenarios result in tightening canola ending stocks.
FBN's take on what this means for the farmer
Crush remains a bright spot in the canola balance sheet for this crop year and is expected to remain strong into 2020/21. This is helping keep the futures market supported, which also is finding support from the soybean complex. The recent strength in canola futures was in line with FBN’s expectations in that we felt futures previously were undervalued. But, we do not look for substantial strength from the current levels at this juncture.
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