Flow of canola oil to U.S. set to hit record in 2024

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Published: August 9, 2024

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American biofuel producers in the first four months of the year imported Canadian canola oil at record pace, and the flow seems set to continue for now according to analysis from Farm Credit Canada.

“Much depends on U.S. policy not only with regards to renewable fuels but also trade, both of which have potential to squeeze Canadian producers. For now, however, the future looks bright,” wrote Justin Shepherd, senior economist with FCC, in analysis posted online on July 24.

Canada exported nearly 1.4 million tonnes of refined and crude canola oil to the U.S. from January to April.

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American biofuel tax structures, and credits coming into effect next year, may harm Canadian biofuel exports as only U.S. production of biodiesel or renewable diesel will be eligible for the credits, Shepherd said.

“For now, however, canola oil producers are taking advantage of the increased demand to fill U.S. capacity and, as a result, we can expect the majority of oil to flow south,” he added.

In Canada, production of biodiesel and renewable diesel spiked in the first few months of the year. Renewable diesel is set to eclipse biodiesel, which until the end of 2023 took second place to ethanol as the main renewable fuel.

Renewable diesel is more chemically similar than biodiesel to petroleum-based diesel and makes a simpler swap. Earlier this year, new renewable diesel plants came online and doubled Canada’s monthly capacity.

Canadian fuel blenders have been increasing the amount of ethanol blending into gasoline, Shepherd wrote. Government blending mandates have contributed, but ethanol is also an economical fuel enhancer that can raise the octane in finished gasoline.

In April, the most recent data point, ethanol accounted for 10 per cent of finished gasoline. This is a new high, Shepherd said.

Ethanol production has been relatively flat in Canada since 2020, with any gains coming from greater efficiency in processing.

About the author

Geralyn Wichers

Geralyn Wichers

Digital editor, news and national affairs

Geralyn graduated from Red River College's Creative Communications program in 2019 and launched directly into agricultural journalism with the Manitoba Co-operator. Her enterprising, colourful reporting has earned awards such as the Dick Beamish award for current affairs feature writing and a Canadian Online Publishing Award, and in 2023 she represented Canada in the International Federation of Agricultural Journalists' Alltech Young Leaders Program. Geralyn is a co-host of the Armchair Anabaptist podcast, cat lover, and thrift store connoisseur.

 

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