Canadian canola exports hit fresh low

Canadian canola exports in 2022-23 have fallen to their lowest in recent years, lagging last year’s already sluggish pace, as an uptick in Chinese demand failed to offset slow interest from the rest of the world, as the focus shifted to Australian supply.

Canadian canola shipments since the start of the 2022-23 marketing year on 1 August have fallen to 729,600t, down from an already multi-year low of 983,700t a year earlier. The export pace this season has constantly lagged the five-year average, except in the week to 3 October, with August volumes totalling just 111,600t, according to customs data — a new monthly low in at least 10 years.

Canada’s exportable canola supply was pressured by record low stocks carried over from last season following a poor harvest. Stocks at the start of 2022-23 were estimated to be as low as 875,000t, down from 1.78mn t a year earlier and 3.46mn t in 2020-21, US Department of Agriculture (USDA) data show.

A late start to the canola harvest this season delayed the arrival of new crops in the market, further weighing on exportable supply. But threshing quickened in recent weeks amid dry and mild weather and has neared completion in Alberta — ahead of year-ago levels. This implies that canola deliveries to terminals could soon recover from multi-year lows at the start of the season.

Sluggish demand added further downside to the export pace, with Canada’s key buyers — China aside — focused either on domestic production or Australian supply.

The EU has largely passed on Canadian supply in 2022-23, despite stepping up rapeseed imports and crush activity — at a seven-year high in August. The bloc received a combined 1.78mn t of product between 1 July and 9 October, up from 1.38mn t a year earlier. But 1.66mn t of this came from Ukraine and Australia, with a mere 37,200t originating from Canada.

The EU has increasingly relied on Australian supply in recent years, which last year helped offset its poor crop harvest and earlier this year lower arrivals from Ukraine. Since the start of the 2021-22 marketing year in the southern hemisphere in November, Australia has exported 3.38mn t of canola to the EU, up from 2.46mn t a year ago and just 995,000t in 2019-20.

But Australia also took market share from Canada elsewhere, stepping up shipments to Japan and the UAE. Japan-bound cargoes from Australia totalled 625,500t in November-August, up from 132,000t a year earlier and a new record. Around 575,000t headed to the UAE at the same time, up from 157,000t in 2021-22 and nothing two years ago.

The EU anticipates that its rapeseed receipts will fall on the year to 4.5mn t in 2022-23, while the USDA anticipates a broadly stable import pace this season. And the USDA’s Foreign Agricultural Service last week pegged EU rapeseed imports 100,000t higher on the year at 5.6mn t, anticipating a recovery in Canada’s market share.

Ukrainian and Australian canola imports to the EU remain more competitive than those from Canada but supply from both areas could hit logistical challenges in the coming weeks or months. The renewal of Ukraine’s grain corridor has been put in question by Russian authorities and a suspension of the nation’s Black Sea exports could pressure canola shipments. Meanwhile, persistent wet weather in Australia — in the east in particular — could delay the harvest pace or deliveries to terminals, while also weighing on the crop’s quality.

In case of a sluggish recovery in EU demand, Canada might need to focus on shipments to other markets, with its exportable supply set to rise on the year — to 8mn t from 5.3mn t in 2021-22, according to the USDA.

China, which primarily relies on Canada for its canola supply, has increased its receipts from the country since September, having reinstated full market access to key Canadian exporters in May. At least 358,000t of Canadian canola has been lined up for shipment to China since the start of last month, which implies volumes to the destination have already risen above year-ago levels when a combined 296,000t was exported in September-October.

The US has also stepped up its Canadian receipts since September as its biofuels and oleochemicals producers seek ways to expand feedstocks. The nation was the second-largest destination of Canadian canola in August, having topped receipts since June.

Tags: shipments, demand, Australia, Ukraine, China, exports, harvest, canola, EU, Canada, rapeseed