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Canada's canola stocks fall to four-year low. Wheat stocks rise

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Canola futures nudged higher, returning above Can$500 a tonne, after Canada revealed that its stocks of the oilseed had shrunk even further than had been thought, sapped by strong export demand.

Canada's canola inventories dropped by 36% to 1.35m tonnes over 2016-17, on an August-to-July basis, Statistics Canada said.

The decline, which left year-end inventories at their lowest in four years, was steeper than expected by investors, who had forecast a 1.5m-tonne figure.

And it reflected in particular a drop in on-farm inventories of the rapeseed variant, which slumped by 57%, compared with a 16.6% drop in commercial stocks.

Strong exports

The data follow a strong period for Canadian exports, the world's biggest, which the International Grains Council pegs at a record 11.1m tonnes over 2016-17, a rise of 800,000 tonnes year on year.

Orders were supported by strong global import demand from the likes of China which, in the face of squeezed domestic supplies, backed down on plans to bar imports from Canada, over disease worries.

The IGC estimated Chinese imports rising by some 300,000 tonnes to 4.3m tonnes over 2016-17, while a report from US Department of Agriculture staff overnight put them at 4.1m tonnes.

The European Union also turned to international markets for more of the crop, after seeing its own rapeseed output drop to levels some 5m tonnes short of consumption needs.

Canola, spring wheat prices

The StatsCan data also imply that Canada's canola stores are more depleted than had been thought ahead of a harvest which, according to official estimates last week, will also fall short of forecasts.

Canola futures for November, which had showed small losses in the run-up to the data, recovered to Can$500.20 a tonne in late deals in Winnipeg, a 0.6% gain on the day, and putting the contract back above its 100-day and 200-day moving averages.

By contrast, the StatsCan report showed Canadian wheat inventories at the close of 2016-17 at 6.87m tonnes - a 33% surge year on year, and ahead of the 6.0m-tonne figure expected by investors.

Nonetheless, Minneapolis spring wheat futures for December, after an initial setback on the data, recovered to stand at $6.41 ΒΌ a bushel in late deals, a rise of 2.0% on the day, on course for its first winning session in seven.

By Mike Verdin

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