Can the US Export Canola Oil to Canada?


Sep 27, 2022 | Agricultural Markets News

Reading time: 2 minute

Canola Oil is known as the most versatile Oil, which is well known for its valuable health benefits and renewable fuel. In addition, the crop’s high-protein meal provides nutrition for livestock, poultry, fish, and even people. North America, more specifically, the US and Canada, are well-known Canola grower countries. In the US, Canola grows around 2 million acres annually, primarily in the Northern Plains, Pacific Northwest, and Southern Great Plains.

In 2021, nearly 2.2 million acres of Canola were planted in 29 states, led by North Dakota (79%), followed by Montana (7.7%), Washington (5.4%), Idaho (3.6%), Minnesota (2.8%) and Oklahoma (0.5%). There are two types of Canola grown in the US: spring and winter. Spring Canola is planted in early spring (March) and harvested around September. This type accounts for the majority of US Canola production. Winter Canola is planted in the fall (September), overwinters, and is harvested in June.

Typically, winter Canola will yield 20 to 30 percent more than spring Canola. It is grown in warmer areas like the Southern Great Plains. In the Pacific Northwest, both spring and winter types of Canola are grown. In the Northern Plains, spring Canola is typically grown, while in the Southern Plains, the winter type dominates. Even though the US grows Canola and produces its Oil, the country’s usage exceeds far than its production. Therefore, the US strongly supports agricultural trade and keeping borders open.

According to the latest USDA Oil Crops Outlook, the US Canola imports increased sharply in the last two months, totaling more than 540 million pounds. The USDA pegs 2022-23 Canola imports at 1.49 billion pounds, an increase of 220 million pounds from its latest forecast. Total Canola crush will reach 4.53 billion pounds.

The increased supplies of Canola are expected to suppress prices in the coming year somewhat as Canola Oil prices are forecast to average 79 cents per pound compared to 91 cents per pound last year. The US is also expected to consume 1.3 billion pounds of Canola Oil for biofuel production in the coming year, up by 50 million pounds from its previous forecast. Canola Oil for food use was also raised by 50 million pounds to 4.88 billion pounds.

Canola Trade between the US and Canada

While other countries grow Canola, Canada remains the world leader in Canola exports. About 90% of the Canola grown in Canada is consumed in export markets. This strong export focus makes Canada’s exporters an essential link in the Canola value chain. More than 50 nations import Canola Seed, Oil, and meal from Canada. The biggest buyer of Canola Oil and meal is the US. For raw Seeds, the most important destinations are China, Japan, and Mexico.

The USDA recently issued a Biofuels Annual report on Canada, which reported that the US Canola Oil exports might find a growing market in Canada. Meanwhile, the USDA Oil Crops Outlook made no mention of new exports, as it projects that all the increased Canola Oil supply made available this coming year will be consumed domestically.

The USDA also reported in its monthly Oilseed Crushing Report that Canola Seeds crushed for crude Oil were 150,198 tons in July, compared with 147,715 tons in June and 145,967 tons in July 2021. Canola crude Oil produced was 117 million pounds, down 3 percent from June and 6 percent from July 2021.

Canola prices were deteriorating in the weeks leading up to the report as higher expected output from North America and other countries dampened the price outlook for the short-term. Worries about inflation following the report also dampened prices for Oilseeds.

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