Canadian shipments to the European Union, United Arab Emirates, China and Japan have taken the most significant hits
Analysts thought Canadian canola exports would be the biggest casualty of this year’s short crop and so far that appears to be the case.
Exports were down almost 50 percent through the first three months of the 2021-22 campaign compared to a nine percent reduction in domestic crush, according to the United States Department of Agriculture.
That is the result of Canadian farmers harvesting 12.6 million tonnes of the oilseed, the smallest crop in 14 years.
Sales to all of Canada’s major buyers are way down but some have fared worse than others.
“Exports to the (European Union) fell by nearly two-thirds, the (United Arab Emirates) experienced a 50 percent dip and China and Japan saw 40 percent declines,” stated the USDA in its recent Oilseeds: World Markets and Trade report.
The reductions were “more muted” for North American markets with sales to Mexico down 12 percent and the U.S. just four percent.
Importers are turning to Australia to displace lost volumes from Canada. The country harvested a record 5.5 million tonnes of canola and is forecast to ship out a record 4.6 million tonnes of the crop.
That would rank a close second behind Canada’s 5.3 million tonne export program, according to the USDA.
MarketsFarm analyst Mike Jubinville is forecasting even lower sales, amounting to 4.5 million tonnes.
If that turns out to be true, Australia would take over from Canada as the world’s leading exporter of canola, which would be a first.
He noted during his recent Farm Forum Event presentation that 2.4 million tonnes of Canadian canola have already been shipped and another one million tonnes has been sold and is in the handling system.
That leaves about one million tonnes to be moved for the remainder of the year.
Jubinville said Canada is so low on supplies that it may have to import canola from Ukraine and even Australia, which is highly unusual.
He is forecasting 8.75 million tonnes of Canadian crush, down from just over 10 million tonnes last year. Crushers are on pace to do 9.5 million tonnes, so that has to slow down.
MarketsFarm is 50 percent sold on old crop canola to date. Jubinville thinks the market still has some work to do to curtail demand, so he is far from bearish.
“It is too early to start a sustained down price trend in the canola market right now,” he said.
“However, I just can’t help shake the feeling that $20 a bushel canola is not normal and is something that can’t last.”
Canadian canola oil exports are down 20 percent through the first three months of the crop year.
Canola oil production is forecast to drop one million tons from last year, while exports are predicted to fall by 600,000 tons.
Part of the problem is that the oil extraction rate for this year’s crop will be close to 41 percent, down from more than 43 percent last year.
“High temperatures experienced during seed development resulted in lower oil content for the crop,” stated the USDA.
Canadian canola oil exports to the U.S. were surprisingly up more than 20 percent during the first quarter of 2021-22, while sales to China are down nearly 90 percent.
That is forcing China to import more sunflower oil from Russia and Ukraine to meet its edible oil demand.
There was record production of sunflower seeds in the Black Sea region this year and high beginning stocks, so there will be ample supplies for China.
