In April last year, our analysis showed that Canada was off to a really poor start. It required a decent drenching to get the crop ticking along. That rainfall never really came, and the Canadian canola crop ended up in an abysmal state.
The result was fantastic for Australian farmers as canola prices hit strong levels and have remained very good since.
As we look forward to the new crop, we can see that prices are remaining strong. While a significant driver is the invasion of Ukraine, the other looming factor is the drought in North America (here & here). The focus has primarily been on the USA, but Canada is also potentially coming a cropper.
This morning I pulled the soil moisture for Saskatchewan and three sub-regions. Saskatchewan and these regions are major producers of Canola.
A quick glance at the soil moisture shows that the moisture levels are lower than last year. I am not a meteorologist or agronomist, but this doesn’t bode well for the crop, especially with an active la Nina.
In this report, I have only included Saskatchewan, but this province contributes a huge percentage of the Canadian national crop across a number of commodities.
If Canada remains dry, then we can expect high canola prices to persist.