(Resource News International) — Demand for Canadian canola meal remains strong, industry watchers say — despite the fact that there’s more of the canola crushing byproduct to go around.
While the record pace of Canada’s canola crush is primarily due to the
growing international demand for vegetable oil, world feed grain
supplies are also tight, which creates a market for the meal.
Canada’s canola oil crush was running at an annual rate of
92.9 per cent of capacity as of March 19, according to the Canadian
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Crushings of 2.54
million tonnes to date compare with 2.16 million at the same point
the previous crop year. Canola typically has an oil
content of about 40 per cent, which means 60 per cent of the tonnage ends up as
meal, according to COPA data.
“So far, the meal demand is holding up well,” said Dave
Hickling, vice-president of canola utilization with the Canola
Council of Canada. He pointed out that the majority of the demand
was coming from the U.S. dairy industry.
“Demand for mid-proteins has been excellent,” said a senior
canola meal merchant with a major Canadian crushing company.
“We’re finding homes for canola meal,” he said, adding that there
are currently no cheap feed alternatives available.
“We’re doing
everything we can, and margins have been good enough for us to
find marketsÂ… it hasn’t been that big of a struggle to get
rid of.”
“The export demand is there because the whole world is
looking for some type of protein source for their livestock.
There is a shortage (of animal feed) and there probably will be
again in the fall,” the canola meal merchant said.
Canola, he said, was primarily competing with distillers dried
grains (DDGs), the byproducts of ethanol production, soybean
meal and feed wheat. In addition to
domestic usage, the merchant said, the bulk of Canada’s canola meal exports were
purchased by the U.S. dairy sector. Smaller amounts of business to
Asian markets, and countries such as Ireland and Morocco, were
The merchant said high soybean meal futures prices at the
Chicago Board of Trade (CBOT), and the resulting increase in
canola meal values, had created some concern about finding
markets for canola meal. However, the recent drop in futures
prices “has really improved the outlook for selling canola meal,”
he said.
Canada exported roughly 1.59 million tonnes of canola
meal during the 2007 calender year, with the U.S. accounting for
97 per cent of that total, according to COPA data.
A U.S.-based canola meal merchant said the U.S. dairy industry
was having no problems fitting the increased canola meal supplies
into their rations for the time being. However, with Canada’s
canola crush capacity set to see significant growth over the next
other markets.
“It looks like (canola meal) will need to go beyond the
dairy rations and into hogs and poultry, or find export
destinations,” the U.S. merchant said, “but that’s
probably two to three years out.” He expected any additional
canola meal would continue to find a home, “at the right price.”
The Canola Council was also “anticipating the
day when our crush will basically double, and canola meal supply
will double, and we’ll have to look for new markets to make sure
we’re getting the highest value,” Hickling said.
While he thought there was
still some room for growth in demand from the dairy sector, “in
the long run we can’t just rely on the dairy industry, so we’ll
have to look at the hog and poultry sector as well.”
