China’s battle against Canadian canola looms over soy

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MarketsFarm — As headlines are transfixed with China’s ongoing dispute with Canada, some are concerned soybeans will receive the same treatment as canola.

“We’ll still use quite a few soybeans in this country as it is,” said Dale McManus, a grain broker with Johnston’s Grain at Welwyn, Sask.

However, he clarified, “everything you’re watching about China and canola will also apply to soybeans.”

Due to the supply glut and lack of demand from the world’s biggest importer, some predict prices may drop under $10 per bushel for soybeans. Though there are markets outside of China, they’ll quickly be filled with existing inventory, or cheaper inventory from other countries.

Given Canada’s tumultuous relationship with China, “we certainly can’t expect the market to stay the same,” McManus said.

Soybean acres, along with canola, are likely to drop in the 2019 growing season as demand dries up. Some farmers may choose to grow flax or other pulses in their place, McManus said.

An impending flood in Manitoba’s Red River valley may encourage some farmers to plant soy due to its short growing cycle, compared to slower-growing crops such as corn.

Feed soybeans, grown along the Manitoba/Saskatchewan border, may hold onto their price of about $10 per bushel.

Soybeans that stay in Canada won’t be immune to the diplomatic dispute, but may not be subject to the same sort of market volatility as exported soy.

“I think producers will expect prices to hold their own,” McManus said.

— Marlo Glass writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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