Competition between Canadian and Australian canola is intensifying in the market

Australia has harvested 7.3 million tonnes of canola this year, which worries Canadian exporters because for the first time in history, Australian exports could match Canada’s.

According to estimates from MSG of Canada, the country will export 9.3 million tons of canola in MY 2022/23, although some analysts consider this forecast to be overstated and estimate exports at 6-7.5 million tons.

Experts at ProMarket Wire believe that it is worth considering selling part of the crop for delivery in January at a price of CAD 20/bushel, as the price could fall to CAD 17/bushel in the second half of the season amid increased competition from Australia.

For the third year in a row, the La Niño phenomenon is helping to increase the harvest in Australia. In FY 2021/22, it exported 5.3 million tons of canola, in FY 2020/21 – 3.75 million tons, although three years ago the average 5-year export figure was 2.15 million tons. To sell 6 million tons to Australia part of the Asian and European market in the amount of 2-3 million tons will have to be taken away from Canada.

In the current season, EU countries imported 3.1 million tons of canola, which is 41% ahead of last year’s pace, although it was previously forecast that in 2022/23 the import will decrease by 19.6%. In the current season, Ukraine delivered 2.12 million tons of canola to the EU, and in general, according to estimates by the US MSG, it will be able to export 2.8 million tons. The EU may soon start importing canola from Canada and Australia.

According to the Australian Bureau of Statistics (ABS), in October compared to September, the country reduced canola exports by 75% from 170.9 to 42.9 thousand tons, of which 27.8 thousand tons were shipped to Japan. However, October is traditionally the lowest month for Australian canola exports.

Canada plans to increase its canola processing capacity by 50% to 5.7 million tons over the next several years.

February canola futures on the Paris exchange fell 0.5% to €556.75/t or $590.4/t yesterday, continuing a slide that began on November 1 and losing 20.5% overall for the period against the backdrop of a drop in demand for biodiesel due to lower oil prices.

January canola futures on the Winnipeg exchange fell 1.3% yesterday to CAD 852.6/t, or $624.3/t, having lost just 3.8% since November 1, as they were supported by the US decision to allow the use of canola oil in the production of biodiesel, which has reduced the prices of soybeans and soybean oil.

In Ukraine, demand prices for rapeseed delivered to Danube and Black Sea ports remain at the level of $470-480/t or UAH 17,200-17,500/t, while for supplies to DAP – Poland and the Czech Republic, they fell by another €20-30/t to 520-540 €/t, as importers have already formed the necessary stocks until February.

Tags: Japan, Australia, Ukraine, prices, Canada, rapeseed