More of Canola Supply Going to Crushers, rather than Exporters

In the battle for Canada’s shrinking canola supplies, it seems the domestic crushers are winning over the exporters.

As part of a virtual presentation last week at the Saskatchewan Crop Organizations annual general meeting, Marlene Boersch of Mercantile Consulting Venture told audience members the current pattern of demand suggests the 2021-22 crush will exceed the 8.5 million tonnes projected by Agriculture Canada, while exports are likely to fall below the government forecast of 5.4 million.

In the wake of last year’s drought-hit Canadian canola crop, Boersch said year-to-date exports are down 44% from the year earlier level, as shipments to every single one of this country’s major export customers have fallen sharply. Indeed, exports to China have declined to just over 662,000 tonnes, compared to about 930,000 a year ago, while the EU has only imported approximately 408,000 tonnes, less than half of the previous year’s 1.05 million.

“Obviously, exports are being rationed very severely because of the reduction in supply, she said.

Canadian canola exports started extremely slowly in August and September but did manage to jump to about 1 million tonnes in October before turning back in November again. Canada typically sees a swell of increased export demand in the spring but Boersch said it remains to be seen whether there will be enough supply left in the country by then to respond to that demand.

Ultimately, Boersch said she believes total Canadian canola exports for the 2021-22 marketing year will amount to 4.7 million to 4.8 million tonnes, which would be down as much as 55% for 2020-21.

In contrast to the sharp reduction in the year-to-date export pace compared to a year earlier, Boersch noted the crush pace is down only 11% at about 3.1 million tonnes.

“So, it’s relatively better maintained, compared to what we’ve seen on the export side.”

Boersch said she expects crushers to continue to push hard to secure enough canola to keep plants operating at peak efficiency, adding the cost of operating climbs as the incoming supply dwindles. As seed becomes more and more scarce, it is possible some crushers may opt to simply shut down later this year rather than run at a reduced capacity, she said.

The final crush for 2021-22 may end up at 9 million tonnes, Boersch said. That would be down 13% from the previous year’s 10.4 million but still well above the Ag Canada forecast.

Boersch said final 2021-22 canola ending stocks are also likely to dip slightly below the current Ag Canada forecast of 500,000 tonnes.