European rapeseed crop shrinks this year

Acreage is expected to be down 18 percent, making it the second disappointing crop in a row for the European Union

The European Union is picking a good time to produce its second straight subpar rapeseed crop.

The United States Department of Agriculture’s Foreign Agricultural Service is reporting an 18 percent decline in EU rapeseed acreage compared to last year.

“Due to dry sowing conditions in some major rapeseed producing countries, rapeseed acreage declined sharply, especially in France and Germany,” stated the USDA in its EU-28 Oilseeds and Products Annual report.

“In Romania, about half of the rapeseed area requires replanting with other crops because of poor germination caused by drought.”

The EU’s ban on neonicotinoids also affected planting decisions because it leads to lower rapeseed yields and reduced profitability, according to the USDA.

Production is forecast to decline eight percent to 18.43 million tonnes. Last year’s output was 10 percent below the previous year, so that would make two disappointing crops in a row.

Carryout in 2019-20 is forecast to fall to 896,000 tonnes, a 39 percent decline from the current crop year estimate. That would be the second lowest level since 2003.

Brian Innes, vice-president of public affairs with the Canola Council of Canada, said Europe’s short crop is Canada’s good fortune.

“In a normal year this would be an opportunity for Canadian canola, he said.

“In the current year it’s a big opportunity for Canadian canola.”

Canada is forecast to end the current crop year with a record 3.5 million tonnes of carryout due to China’s sudden refusal to accept Canadian product.

Innes said the EU is capable of crushing up to 25 million tonnes of canola annually. There could be quite a shortfall this year considering domestic production is forecast at 18.43 million tonnes.

“We have lots of supply and there is strong demand in Europe. We would expect imports to increase substantially,” he said.

The USDA doesn’t share that optimism. It forecasts 4.5 million tonnes of EU canola imports in 2019-20, up five percent from the current crop year.

Canada will likely have stiff competition selling into the EU in the coming crop year.

Australia is typically the top supplier of canola to the EU. Last year was an anomaly due to a miserable harvest.

Australian growers produced an estimated 2.2 million tonnes in 2018-19, a 40 percent drop from the previous year because of reduced plantings and poor yields.

The USDA expects production to rebound to 3.7 million tonnes in 2019-20. Exports are also forecast to recover to 2.4 million tonnes, up from 1.9 million tonnes in 2018-19.

Sixty percent of what Australia exports goes to the EU. Importers like that 80 percent of the Australian crop is non-GM, so it can be used in the food sector, as well as for biofuel.

Ukraine is another big supplier to the EU. The USDA forecasts 3.2 million acres of Ukrainian canola in 2019-20, a 24 percent increase over the previous year.

Production is estimated at 3.4 million tonnes, a 25 percent increase. Exports are also expected to be on the rise at 3.1 million tonnes, a 29 percent jump over the previous year.

About 80 percent of what Ukraine exports goes to the EU.

But Innes is convinced Canada will be a strong supplier of canola to the EU in the coming crop year.

Most Canadian canola is used to produce biodiesel. Viterra, Cargill and Archer Daniels Midland all have sustainability certification programs that allow them to ship Canadian canola to the EU for biodiesel production.

Innes expects that business to boom in 2019-20 as the EU scrambles to fill in for its shortfall of domestic production.

But in the long-term, there are looming threats to the EU’s future canola demand.

Changes to the EU’s Renewable Energy Directive is leading to lower rapeseed demand for biodiesel in recent years, according to the USDA.

“The potential of rapeseed oil is also limited due to strong competition from the return of Argentine biodiesel exports to the EU, as well as price competitive palm oil and soya oil,” stated the report.

The EU has also approved U.S. soybean-based biodiesel for import, which will come at the expense of rapeseed biodiesel.

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