Dip in EU oilseed output could spur Canada’s exports

Ukraine’s rapeseed crop also down Australia could fill the gap, leaving Canada to take over Chinese markets

The International Grains Council is forecasting declining winter rapeseed production in the European Union and Ukraine.

It could mean Europe will have to import more Australian canola next year, which would allow Canada to export more to China.

The council estimates EU plantings will fall by four percent to 16 million acres, the lowest level since 2012-13.

“Farmers were discouraged from sowing due to low prices and reduced profitability, while new EU farm subsidy rules have rendered other crops relatively more attractive,” said the council in its October summary.

Yields are expected to be down because of dry seeding conditions in major production regions.

An EU ban on neonicotinoid pesticides is also expected to diminish yields because of high levels of insect damage in Germany and the United Kingdom, two of the EU’s top rapeseed producing countries.

“Next year’s EU crop is likely to be significantly smaller,” said the council.

The EU is the world’s biggest producer of rapeseed-canola and the second largest exporter of the crop behind Canada.

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Ukraine is also a major exporter. Its winter crop typically accounts for 95 percent of the country’s total rapeseed production.

The council is forecasting 2.12 million acres will be planted in Ukraine, down nine percent from last year’s plantings and 25 percent below the previous five-year average.

“This is a continuation of the steady downward trend of recent seasons and reflects a gradual switch to spring-sown crops, which are less prone to damage from adverse weather,” said the council.

Yields are expected to be down as well because of reduced application of inputs caused by poor credit availability associated with the ongoing conflict with Russia.

“Output is seen falling markedly year-on-year,” said the council.

That’s all good news for Canadian canola growers, said Chuck Penner, an analyst with LeftField Commodity Research.

He said most of Ukraine’s rapeseed is grown in the west, far away from the political turmoil in the east, but he agreed that yields will be down because of a lack of inputs.

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Penner said Stratégie Grains is also forecasting a small contraction in EU rapeseed acreage.

He said the best guess at this stage is for normal yields, which would be down from terrific yields in 2014-15.

“That will be positive. That would mean that Europe would probably start to buy more again from Australia, so then Australia stops exporting so much to China and then it helps our business,” said Penner.

Australia is expected to harvest a smaller canola crop. The Australian Oilseeds Federation estimates 3.65 million tonnes of production, down from 3.9 million tonnes in 2013-14.

There has been poor winter rainfall in the core growing regions of southern New South Wales, central Victoria, the Wimmera districts and South Australia.

The IGC said plantings in Belarus are estimated at 988,000 acres, unchanged from last year.

Russia’s rapeseed crop is largely planted in spring.

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