Short crop and killing demand — the bull is loose on canola

It doesn’t matter what the prices are if you have no crop to sell.

That’s a hard truth that Neil Townsend of FarmLink Marketing Solutions shares in this week’s Wednesday edition of RealAg Radio on Rural Radio 147 Sirius XM.

There’s going to be low numbers on canola, wheat, barley — you name it, he says. Even at the high end of yield estimates, it’s still low.

“We are in the realm where we have to kill demand, but how much demand do we have to kill?” he asks.

There’s one terminal price where demand starts to die-off dramatically, but what is that price? That, Townsend doesn’t have that answer for.

We have been surprised by final production numbers before, but this year it just feels that estimates are more in line with what is actually out there. There are pockets of decent crop, but it’s not likely enough to really pull up the average.

For the market, once we slip below 18 million tonnes of canola — and FarmLink is there — it’s game on, he says.

“It’s going to be even tighter than our worst imagination,” says Townsend. “And we need to make significant demand cuts on off-shore demand to ration this crop.”

Hear the entire interview on RealAg Radio, starting at the 16:00 minute mark.