Canadian farmers might produce a record large canola crop this fall, but the total amount of canola available to market will likely fall short of the record.
Many analysts think the harvest will produce 15.5 million tonnes of the oilseed, topping the previous record of 14.6 million set two years ago.
However, the carry-in from last year will be a tight 608,000 tonnes.
This year’s crop, when added to the carry-in and allowing for modest imports, makes for a total supply of 16.2 million tonnes.
The carry-in was much larger in 2011-12, about 2.2 million tonnes.
As well, imports were just shy of 100,000 tonnes, making for total supply of 16.9 million tonnes, 700,000 tonnes more than what is expected this year.
There was enough domestic and export demand in 2011-12 to shrink year end stocks to 707,000 tonnes.
Domestic crushing capacity is larger now than it was two years ago, and crushers will be keen to have access to more canola after operating well below capacity through much of the second half of last year.
Also, the new biodiesel plant at ADM Agri-Industries in Lloyd- minster, Alta., is expected to begin operating by the end of the year, providing another few hundred thousand tonnes of demand.
However, the export market might be more challenging this year.
Europe, Ukraine and Russia all have larger rapeseed crops. That means Australia will export less to Europe and will be looking for alternative markets. It had been blocked from China for the past couple of years because of blackleg concerns. It recently worked a deal that gives it access similar to Canada’s status.
As a result, Canadian canola won’t have China to itself. It was the biggest buyer of Canadian canola last year, taking about 2.73 million tonnes. That could fall this year as the Australian industry talks of shipping more than a million tonnes to China.
However, I expect that by the end of the year Canadian stocks will continue tight in an historical context.