Canada’s Effect on Rapeseed Oil Market
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Rapeseed is a crop grown primarily for its seeds, which can be crushed to produce Rapeseed Oil and Rapeseed meal grown in a wide variety of geographical regions in the United States, Canada, and other regions of the world. Canadian farmers began planting Rapeseed in 1974 and became the world’s largest single-country producer. It produces more than 25% of the global supply of Rapeseed and leads the world in exports. Therefore, events in this country can have an important effect on prices. Also, extreme cold or warm temperatures can limit crop production. Last summer’s extreme drought across western Canada farmers had slow downed the supplying process and because of this demand, Canada still remains firm on support from strong world demand for vegetable Oils as the crop year winds down.
Agriculture Canada’s outlook report of July estimates for Canadian Rapeseed crush is unchanged from last month at 8.3 Mt, versus 10.4 Mt for 2020-21, on support from late in the crop year crush volumes. The export estimation remains unchanged at 5.15 Mt, sharply lower than the 10.6 Mt shipped out of the country last year, as high prices restrict export buying. Carry-out stocks are estimated at a very tight 0.4 Mt, down 77% from last year, for stocks to use a ratio of 3%. Rapeseed price is estimated at $1,050/t; a reduction of $50/t from last month, under pressure from a large sell-off in world Oilseed markets sparked by good global crop prospects and anticipated lower new crop prices.
Statistics Canada’s Seeded Area survey estimated that in 2022-23; the Rapeseed harvest area will be 8.7 million hectares (Mha), a drop of 5% from last year. By province, Manitoba seeded 1.34 Mha, Saskatchewan 4.61 Mha, and Alberta 2.64 Mha. Most of the difference between the intended and actual seeded areas was due to a series of rain storms that fell across the western provinces. The Rapeseed area estimates contain some uncertainty this year due to the late spring and wet conditions across the eastern Prairies, which may have prevented the seeding of some of the crops. Harvested area is forecast at 8.6 Mha based on historic abandonment rates while yields are forecast at 2.14 tons per hectare based on a 5-year average.
In 2022-2023, usage of Canadian Rapeseed is forecast to recover with exports up 75% to 9.0 Mt while domestic crush rises to 9.3 Mt versus 8.3 Mt last year. Carry-out stocks are up moderately to 0.45 Mt for a stocks-to-use ratio of 3%. Canola prices are forecast to decline to $950/t track Vancouver, a drop of about 10% from the record highs in 2021-22. If realized, this would be the second highest price on record.
Canada’s Rapeseed Oil Export Forecast
According to the United States Department of Agriculture, the total Rapeseed export has increased by more than 45%. When it comes to Rapeseed Oil and its exports it has skyrocketed by nearly 90%. The 5 world’s largest Rapeseed exporters are Canada, the EU, China, Australia, and Ukraine. The EU countries, China and Japan are among the biggest importers on the market.
As per Canadian International Merchandise Trade Database’s April Data, the US exported 151,697 Mt Rapeseed Oil from Canada, and China came in second place with 48,445 Mt followed by Mexico, Japan, and South Korea. Since Rapeseed is used to produce livestock feed and biofuel, this should also boost prices for the commodity. On the other hand, a global recession or severe emerging market slowdown could limit demand. The future of Rapeseed Oil might be affected by several factors which are growing conditions across western Canada, the US’s high demand, the world’s supply chain shocks and shifts in trade patterns due to the Russian invasion of Ukraine, other countries’ export policies, etc.
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