Canada: Canola oil demand expected to rise
Demand for canola oil looks strong in the short term and the longer term, says a market analyst from Germany.
In the 2024-25 crop year, world supplies of sunflower seed and rapeseed (including canola) dropped about 13 million tonnes.
Crushing of the two oilseeds will decline this year and palm oil output has been flat, which should create robust demand for canola oil in 2025.
“In the past two seasons, the growth in world rapeseed oil and sunflower oil output largely offset the slowdown in world palm oil output,” said a slide in a presentation by David Mielke, an analyst with Oil World in Hamburg, Germany.
Additional production of rapeseed and sunflower oil did not happen in 2024-25, thus “creating a bullish supply scenario for vegetable oils in the next 12 months.”
Mielke spoke via Zoom at Manitoba Ag Days in Brandon Jan. 21, sharing charts and data to explain the state of the global vegetable oil market.
One of them was a pie chart illustrating the growth in world consumption of vegetable oils and fats from 1994 to 2024:
- In 1994-95, global consumption was 92.9 million tonnes.
- In 2024-25, that number was 264.2 million tonnes.
Palm oil captured the lion’s share of that growth, going from 15.8 per cent of the market to 31 per cent of vegetable oils and fats, which are used to produce food, biofuels and oleochemicals.
“Palm oil is still dominating the global market of eight veg oils, with a production share of 36 per cent and an export share of 53 per cent,” Mielke said.
However, palm oil production in Malaysia and Indonesia has plateaued. Demand for vegetable oils for uses in food and sustainable aviation fuel will continue to expand.
Therefore, Canada has a massive opportunity to capture a larger slice of the vegetable oil pie.
“We are running into a structural … deficit in years ahead,” Mielke said.
“I urge you to continue to invest … and improve your planting practices and try to raise your canola production and productivity.”
Another chart from Oil World showed that biofuel now consumes about 20 per cent of vegetable oils and fats, globally.
Mielke predicts that production of biodiesel will slow down, but sustainable aviation fuel (SAF) will expand.
“SAF is still a very small part of the equation,” he said.
“We expect this change in coming years … soaring production of SAF.”
The next five years, or longer, looks positive for canola oil demand, but canola has a soybean problem this winter. South American production is through the roof, and a gigantic supply of beans is weighing down the vegetable oil market.
“World soybean ending stocks (for 2024-25) … at 128 million tonnes is by far the largest carryout of soybeans that we’ve ever seen,” said Mike Jubinville, senior markets analyst with Glacier MarketsFarm.
Crushers will turn to beans to produce more soybean oil, but that causes a different headache — a flood of soybean meal.
“If we try to solve the vegetable oil shortage by growing more soybeans … we cannot solve the problem in vegetable oils without creating a surplus of (soy) meal,” Mielke said.
“The slowdown of the growth in palm oil production is creating opportunities for you (canola growers) as a producer of a high yielding oilseed.”
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