(Resource News International) — Canada’s canola crush capacity has been slowly
creeping upward with steady food demand and increasing biofuel
needs behind the rise, market participants said.
Canada’s current canola crush capacity has been estimated at
between four million and 4.5 million tonnes, with domestic
processors in Canada reluctant to confirm those numbers.
The debate on exactly where Canada’s crush capacity currently
stands was fueled by the latest weekly crush estimate from the
Canadian Oilseed Processor Association (COPA).
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COPA on Friday reported that 80,969 tonnes of Canadian
canola were processed by crushers during the week ended October
24. Crush capacity utilization during the week, meanwhile, was
pegged at 100 per cent.
“I don’t think the industry has ever seen that kind of
number before,” said Mike Jubinville, an analyst with the farmer
advisory service, ProFarmer Canada. “The number seems to
suggest that more crushing capacity in Canada has come on line at
some of the major processors.”
Some “mom-and-pop” biodiesel operations may have also come
on line in Western Canada, but the majority of this capacity is
likely from the big companies, he said.
Jubinville said there is no way Canada’s canola crush
capacity can work at 100 per cent, as 100 per cent is perfection and nothing is
Chris Beckman, an oilseed analyst with the market analysis
division of Agriculture and Agri-Food Canada, agreed it was
highly likely that the crush industry has not updated its
capacity capabilities.
“I don’t doubt that there is strong demand for Canadian
canola oil whether its for the food sector or even possibly
biofuels, but from a historical viewpoint, no crush facility has
ever run at its full maximum,” he said.
A spokeswoman at COPA acknowledged that the association did
not have up-to-date crush capacity data from its members.
“Our members’ facilities have obviously been working pretty
well flat out, but there have also been additions to capacity
that have not yet been officially reported,” she said.
“Our current official canola crush capacity estimate is
around 3.825 million tonnes,” the COPA spokeswoman said.
Cargill Ltd. announced in late August that it will build
a second canola processing plant adjacent to its existing
operation in Clavet, Sask. The investment will double the
company’s oilseed processing capacity to 1.5 million tonnes
annually. Groundbreaking for the new facility will take place in
the coming months, with construction expected to be complete and production
started by November 2008.
James Richardson International (JRI), which owns Canbra
Foods Ltd., at Lethbridge, Alta., announced in August it was in
the process of building another oilseed processing facility in
the Yorkton, Sask. region. That facility was expected to
be operational by 2009.
Louis Dreyfus was also planning on building an oilseed
processor in the Yorkton, Sask. region.
Bunge in Canada operates nine oilseed crushing facilities
located across the Prairie provinces as well as in Eastern
Canada.
Jubinville said most of the Canadian canola oil currently
being processed was likely destined for the food sector.
“Some of the Canadian canola oil being crushed is likely
going to the export market, with China in particular a key
destination,” he said. “China has a desire for canola oil at this
point.”
The booking of tankers to move the Canadian canola oil is
also currently cheaper than bulk freight for the movement of the
actual canola seed, Jubinville said.
Beckman estimated Canada’s canola crush during 2007-08
would be in the 3.550 million-tonne range, which would compare with
the record 3.579 million established during 2006-07.
Of the crush, Beckman estimated that Canadian canola oil
exports in 2007-08 would likely total around 1.16
million tonnes, which would be just slightly lower than the 1.26
million exported during 2006-07.
