(Resource News International) — Canada’s canola crush is expected to hit a new record in the upcoming 2010-11 crop year, as additional capacity comes online. That increased crush pace will result in more canola oil and meal to be marketed, but industry officials were confident the demand would be there for the products.
The increased processing capacity in Western Canada will see the domestic crush rise to 5.5 million tonnes in 2010-11, from a forecasted 4.5 million tonnes in the current crop year, according to supply/demand estimates from Agriculture and Agri-Food Canada’s market analysis division.
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Chris Beckman, oilseeds analyst with AAFC’s market analysis division in Winnipeg, said Canada exported about 1.5 million tonnes of canola oil in 2008-09 and is on pace to surpass that number in 2009-10.
The two major customers are the U.S. and China, with the U.S. expected to import more than a million tonnes of canola oil, and China expected to take between 400,000 to 500,000 tonnes of canola oil during the current marketing year.
While Chinese restrictions on canola seed infected with the common blackleg fungus have tempered canola seed sales, the country still wants the oil and is making purchases from Canada, Beckman noted.
“Canola oil and canola meal exports to China have picked up quite a bit,” said Dave Hickling, vice-president of canola utilization with the Canola Council of Canada. In addition, he said, canola oil demand from the U.S. has been fairly steady at roughly 100,000 tonnes per month.
“Dual personality”
While China and the U.S. are the dominant markets for Canadian canola oil, Hickling said a number of smaller markets were also increasing their purchases. Large global soyoil supplies were keeping the premium of canola oil over soyoil narrower than it has been in the past, he said. That narrower premium is helping canola oil move into some markets where price is more of a factor.
“Canola has a dual personality,” said Hickling, noting there is some general commodity-based demand for canola oil, but there are also those markets that value canola oil at a premium for its health and cooking attributes.
With the domestic crush expected to increase by a million tonnes in 2010-11, it would result in roughly 400,000 more tonnes of canola oil and 600,000 more tonnes of canola meal to market, using an average oil content of 40 per cent.
AAFC’s Beckman said the global demand for vegetable oil appears to be strong, and he didn’t anticipate any problems moving the additional oil supplies in 2010-11. He added that the health attributes of canola oil, compared to some other competing vegetable oils, will keep the demand strong.
On the meal side, Canada has faced some difficulties over the past year moving canola meal to its main export market, the U.S. Salmonella in some shipments caused a number of Canadian plants to be put on “import alert,” effectively barring canola meal from those plants from entering the U.S.
Canada shipped roughly 1.8 million tonnes of canola meal to the U.S. in 2008-09, and is off that pace in 2009-10. However, Hickling said, there were still about 100,000 tonnes of canola meal moving to the U.S. every month.
In addition to the U.S., China and Mexico are both making larger purchases of canola meal, with other Asian markets including Vietnam and Thailand also “picking up some of the slack” resulting from the lost U.S. business, said Hickling.
While the new canola meal demand was welcomed, Hickling said it remains an industry priority to fix the situation with moving canola meal to the U.S., as the country’s dairy sector is a higher-valued market.
